Oracle Corporation finds itself at the center of a compelling market narrative, caught between a significant strategic victory and mounting skepticism from prominent investors. The software giant’s recent move to secure a stake in TikTok’s U.S. operations through a new joint venture is being directly challenged by bearish wagers, most notably from famed investor Michael Burry.
The TikTok Agreement: A Data and Cloud Coup
After protracted negotiations, a resolution for TikTok’s U.S. operations has been reached, placing Oracle in a pivotal position. Under the terms of the deal, a consortium of U.S. and global investors will hold an 80.1% stake in the video app’s American division. Oracle, alongside Silver Lake and Abu Dhabi-based MGX, is set to acquire a 15% share each, while ByteDance retains a minority holding of 19.9%.
The arrangement, confirmed by former President Donald Trump who praised the new owners, grants Oracle more than prestige. It provides the company with operational oversight of the data and algorithms underpinning a massive user base—a strategic asset that aligns seamlessly with Oracle’s expanding cloud infrastructure ambitions.
Mounting Concerns Amid Growth
Despite this positive development, Oracle’s share price has faced considerable pressure, declining approximately 16% over the past 30 trading days. This market unease is embodied by Michael Burry of “The Big Short” fame, who has taken a public bearish stance. Burry has purchased put options, positioning for a further decline in the stock, and cites several fundamental concerns:
Should investors sell immediately? Or is it worth buying Oracle?
- Substantial Liabilities: Burry points to Oracle’s debt and lease obligations, which total around $124 billion.
- Cash Flow Pressure: The company reported a negative free cash flow of $10 billion for its second fiscal quarter.
- Aggressive Capex: Planned expenditures approaching $50 billion for the 2026 fiscal year pose a risk in an uncertain macroeconomic climate.
Burry’s central critique questions how Oracle intends to finance such aggressive expansion should demand for its services soften.
Impressive Metrics Versus Valuation Volatility
Countering these warnings are robust growth figures from Oracle’s core cloud business. The company recently reported cloud revenue surged 34% to $8.0 billion. A key indicator, the remaining performance obligation (RPO), skyrocketed to $523 billion, fueled in large part by long-term commitments from technology leaders like Meta and Nvidia.
The current investor sentiment appears divided. While retail investor activity suggests optimism regarding the TikTok involvement, equity analysts are adopting a more measured view, carefully weighing the evident growth potential against the balance sheet risks highlighted by critics. The coming quarters will be critical in determining whether Oracle’s operational cloud momentum can generate sufficient returns to offset its capital costs and reverse the recent downward trend in its share price.
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