TLDR
- Oracle (ORCL) stock was up 5.85% on Wednesday after the FT reported a canceled Tencent deal.
- The $7 billion, five-year lease covered up to 100,000 advanced AI chips.
- U.S. officials raised concerns, and Beijing asked Tencent to seek domestic chips.
- Oracle opened at $126.14, far below its 52-week high of $255.28.
- Oracle priced a $20 billion stock and notes raise, and Stephens upgraded it to Overweight.
Oracle (ORCL) stock was up 5.85% on Wednesday, even with news that a big China deal is off. The stock opened the day at $126.14.
The Financial Times reported that Oracle canceled a $7 billion chip leasing deal with Tencent. It cited two people familiar with the matter.
The five-year lease was signed earlier this year. It gave Tencent access to as many as 100,000 advanced AI chips.
Those chips sit in data centers across southeast Asia. The setup ran through Oracle’s cloud business.
Why the Tencent Deal Fell Apart
U.S. officials raised concerns with Oracle about the contract. The Trump administration has kept up pressure on Chinese access to advanced AI chips.
Beijing also took a hard look at the deal. Tencent was asked to seek domestic chips instead.
The FT reported on Tuesday that Nvidia told its cloud clients to sell at least 51% of their capacity to non-Chinese firms. Washington wants to keep its lead in AI while holding back Chinese development.
Not every deal is dead. ByteDance and Alibaba still have large chip leasing contracts with U.S. providers.
Oracle is a major supplier to ByteDance in Asia. It runs several data centers in Malaysia.
Where Oracle Stock Stands
Oracle stock sits well below its 52-week high of $255.28. The 52-week low is $114.50.
The 50-day moving average is $140.93, and the 200-day is $156.43. Oracle’s market value is about $381.41 billion.
Oracle recently priced $10 billion of new stock at $116 each, plus $10 billion of notes. Baird said the raise was “exactly what they previewed.”
Stephens upgraded Oracle to Overweight with a $213 price target. The Wall Street consensus is Moderate Buy, with an average target of $249.27.
In September, Oracle reported earnings of $1.92 per share, beating the $1.74 estimate. Revenue rose 29.6% to $19.34 billion.
Director Stephen Rusckowski bought $3.48 million of Oracle stock at $139.35 on Sept. 29. Oracle also paid a $0.50 quarterly dividend on Oct. 23.
The FT report landed Wednesday, and Oracle stock was up 5.85% on the day.
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