It might be a cause for concern that tech company Oracle (NYSE:ORCL) is offering up cloud servers for TikTok’s use, which may be about to be banned or possibly sold in the United States. But analysts aren’t especially concerned and offered up an assessment that suggests Oracle’s hit wouldn’t be all that noticeable here. Investors, meanwhile, took it as a good sign as well, and sent Oracle shares up fractionally in Thursday afternoon’s trading.
The word from Bernstein, via analyst Mark Moerdler and team, suggested that Oracle would indeed take a hit from not having TikTok’s hosting business any longer. Moerdler did note that Oracle itself said that “…TikTok is indeed material revenue for Oracle’s OCI cloud offering.” This was immediately tempered by the revelation that Oracle’s management doesn’t look for any “…immediate threat to Oracle’s revenue.” Meanwhile, even if a ban does go through without a sale, the actual fallout from the loss of TikTok would “…take a while for any impact to be seen,” Oracle’s management noted.
A Drop in a Comparatively Large Bucket
There’s likely a good reason that Oracle seems comparatively blasé about the impact of TikTok, and that reason is because it’s got quite a bit else going on. In fact, just last quarter, Oracle signed 40 different deals in the artificial intelligence (AI) space, which, all together, added up to about $1 billion in business. It’s also currently building what its Chairman, Larry Ellison, calls the “…world’s largest AI data center.” That combination of factors together suggests that Oracle will likely get along just fine without the TikTok business.
Is Oracle a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on ORCL stock based on 15 Buys and 14 Holds assigned in the past three months, as indicated by the graphic below. After a 53.62% rally in its share price over the past year, the average ORCL price target of $137.33 per share implies 9.44% upside potential.
