TLDR
- Oracle (ORCL) stock was up 5.85% Wednesday after the FT reported a canceled Tencent deal.
- The $7 billion, five-year lease covered up to 100,000 AI chips.
- U.S. officials raised concerns, and Beijing asked Tencent to seek domestic chips.
- ByteDance and Alibaba still have large chip leasing deals with U.S. providers.
- Oracle opened at $126.14 and sits far below its 52-week high of $255.28.
Oracle (ORCL) stock was up 5.85% on Wednesday, even though the Financial Times reported the company dropped a major China-linked contract. The stock opened the day at $126.14.
The canceled deal was a $7 billion chip leasing contract with Tencent. The FT cited two people familiar with the matter.
Oracle signed the five-year lease earlier this year. It would have given Tencent access to as many as 100,000 advanced AI chips.
Those chips sit in data centers across southeast Asia. Tencent would have reached them through Oracle’s cloud.
Pressure From Washington and Beijing
U.S. officials raised concerns with Oracle about the contract, the FT said. The Trump administration has kept a close eye on Chinese access to advanced AI chips.
Beijing also scrutinized the deal. Tencent was asked to seek domestic chips instead.
A day earlier, the FT reported that Nvidia told its cloud clients to sell at least 51% of their capacity to non-Chinese companies. That report came out Tuesday.
Washington wants to keep its lead in the AI race while holding back Chinese development. The Oracle cancellation arrived against that backdrop.
Other Chinese tech giants still lease chips from U.S. providers. ByteDance and Alibaba both have large deals in place.
Oracle is a major supplier to ByteDance in Asia. It runs several data centers in Malaysia.
Where Oracle Stock Stands
Even with Wednesday’s gain, Oracle trades far 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 financing 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 posted earnings of $1.92 per share against a $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 paid a $0.50 quarterly dividend on Oct. 23.
Oracle stock was up 5.85% on Wednesday as news of the canceled lease spread.
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