Oracle Shares Surge on TikTok Joint Venture Deal, Driven by Cloud and Data Security Role

TikTok and Oracle: A Strategic U.S. Joint Venture

TikTok has signed binding agreements to form a new U.S. joint venture majority-owned by American investors, including Oracle, Silver Lake, and MGX. This move aims to address long-standing U.S. national security concerns over the app's Chinese ownership. The new entity will operate independently and manage U.S. data protection, content moderation, and algorithm security.

Oracle's shares have surged in response to the deal, with premarket trading showing gains of over 6%. This reflects strong investor confidence in Oracle's new strategic role in the joint venture. Oracle will serve as a key cloud infrastructure and data security provider for the new entity.

The joint venture is expected to close on January 22, 2026, and will involve a new entity called TikTok USDS Joint Venture LLC. American and global investors, including Oracle, will hold 80.1% of the new company, with ByteDance retaining a 19.9% stake. This structure ensures no single party has overwhelming control while allowing the U.S.-backed group to establish operational oversight according to market analysts.

How Markets Reacted

Oracle's stock has seen a significant boost following the announcement. Shares rose 5.4% in extended trading Thursday after ending the regular trading day up 0.9%. The deal has been seen as a major validation of Oracle's growing influence in cloud infrastructure and high-stakes corporate ventures.

The positive sentiment has extended beyond Oracle. Bitcoin prices have climbed above $88,000, and AI mining stocks have also seen gains. This reflects broader market optimism about the deal and its potential to ease concerns over AI-driven valuation risks according to analysts.

TikTok's U.S. operations will be managed by a new joint venture with a seven-member majority-American board. This move is expected to address U.S. government concerns about national security, foreign surveillance, and algorithmic propaganda manipulation. The new entity will store U.S. user data in a system run by Oracle, ensuring it is safeguarded in a trusted and secure cloud environment.

Risks to the Outlook

Despite the positive market reaction, the deal still faces some skepticism and must be approved by China. TikTok CEO Shou Chew's memo did not mention China's view on the agreements, leaving questions about potential regulatory hurdles. The deal must navigate Chinese laws that prohibit the sale or transfer of algorithms, which are central to TikTok's success according to market experts.

The algorithm, which drives user engagement through personalized content feeds, will be licensed to the U.S. entity. This allows the new company to retrain the algorithm using domestically stored data overseen by Oracle. The goal is to mitigate risks of external influence while preserving the platform's core functionality according to industry sources.

The deal also has broader implications for U.S.-China relations. By addressing national security concerns, the arrangement could ease tensions in technology and trade issues. However, ByteDance's retained stake and ongoing involvement in areas like profits and global operations have drawn scrutiny regarding full compliance with the law's mandate for no operational ties according to analysts.

What This Means for Investors

Oracle's expanded role in securing U.S. user data and monitoring algorithmic processes could drive significant upside for the company's non-AI business segments. Analysts suggest this deal could bring durable, higher-margin workloads to Oracle's cloud business, reinforcing its position as a key player in AI cloud and data security.

For investors, the deal represents a strategic win for Oracle and an opportunity to capitalize on the growing demand for secure cloud infrastructure. The company's stock has shown consistent upward momentum, with a consensus 1-year target estimate of $290.88 per share. This suggests significant upside potential from current levels according to market analysis.

TikTok's continued expansion into e-commerce, including partnerships with Amazon, highlights the platform's entrenched position in American digital culture. The new joint venture is expected to maintain this momentum while addressing regulatory concerns, ensuring the app's continued growth and relevance according to industry observers.