Oracle announced it will acquire a 15% equity stake in the newly formed TikTok USDS Joint Venture LLC, a U.S. entity that will control TikTok’s domestic operations. The joint venture is structured so that a consortium of American investors—Oracle, private‑equity firm Silver Lake, and Abu Dhabi‑based MGX—will own 45% of the company, while ByteDance retains a 19.9% minority share. The transaction is valued at roughly $14 billion, reflecting the estimated U.S. business value of TikTok and the strategic premium Oracle is paying for a majority‑American board and a trusted security partner role.
Oracle’s role as the trusted security partner will give it responsibility for storing U.S. user data, auditing compliance, and overseeing algorithm security and content moderation. This arrangement positions Oracle to generate new cloud‑hosting and security‑as‑a‑service revenue streams that complement its existing AI‑infrastructure business. By tying its cloud services to a platform with more than 170 million U.S. users, Oracle gains a high‑volume, high‑frequency customer that can help offset margin compression associated with its AI‑infrastructure expansion and diversify its revenue mix beyond legacy software contracts.
Oracle’s recent earnings provide context for the strategic importance of the deal. In Q3 FY2025, Oracle reported total revenue of $14.1 billion, up 8% YoY, with cloud revenue rising 25% to $6.2 billion. The following quarter, Q4 FY2025, saw revenue climb to $15.9 billion, a 11% increase, and cloud revenue grew 27% to $6.7 billion. In Q1 FY2026, revenue reached $14.9 billion, up 12%, with cloud revenue at $7.2 billion. Q2 FY2026 delivered $16.1 billion in revenue, a 14% YoY gain, and cloud revenue surged 34% to $8.0 billion. Oracle’s EPS beat expectations in Q4 FY2025 by $0.04 (24%) and in Q2 FY2026 by $0.66 (40%), largely due to disciplined cost control and a favorable mix of high‑margin cloud contracts. The company’s guidance for the next quarter maintains a strong growth outlook, reflecting confidence in continued demand for its cloud and AI services.
Management highlighted the deal’s strategic fit during a recent earnings call. CEO Safra Catz noted that “the partnership with TikTok gives Oracle a unique foothold in the U.S. data‑hosting market and reinforces our commitment to secure, scalable cloud solutions for high‑growth platforms.” CFO Mike Sicilia added that the transaction “aligns with our broader strategy to deepen our presence in data‑centric businesses and to leverage our security expertise to capture new revenue streams.”
The market’s reaction to Oracle’s recent earnings—particularly the EPS beats in Q4 FY2025 and Q2 FY2026—underscores investor confidence in the company’s cloud and AI trajectory. The TikTok joint venture is expected to accelerate Oracle’s non‑AI revenue growth by adding a high‑volume, high‑frequency customer base and by creating new opportunities for cloud‑hosting and security services. The deal also mitigates regulatory risk by ensuring U.S. operations are controlled by a majority‑American board, addressing long‑standing national‑security concerns about Chinese ownership.
The content on BeyondSPX is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.