Why Oracle Stock Popped Again Today

Key Points

• TikTok looks like it's about to be sold.

• And Oracle may be one of a team of companies that will buy it.

• 10 stocks we like better than Oracle ›

Oracle (NYSE: ORCL) stock is moving higher again Tuesday, up 2.4% through 10:30 a.m. ET, and this time not because of artificial intelligence and OpenAI, but because of TikTok and the U.S. Treasury!

At a press conference Monday, Treasury Secretary Scott Bessent said the U.S. and China are making progress on a new deal to avoid the imposition of 145% tariffs on Chinese imports. One of the bargaining chips on the table is TikTok, which could theoretically be banned in the U.S. as early as Wednesday.

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But in fact won't be banned.

Because Oracle (among other companies) may buy it.

Image source: Getty Images.

Oracle + TikTok = what?

As CBS reports, Oracle is leading a "consortium of firms" that will may acquire TikTok's U.S. business and permit the company to distance itself sufficiently from China and the Communist Party to permit it to continue operating in the U.S.

"The commercial terms have been agreed upon," said Bessent. Still, not all the details are clear, or public, with President Trump declining to say who will participate in the consortium, and neither Oracle nor TikTok commenting yet.

Oracle's involvement in some capacity does seem highly likely, however. Since 2022, Oracle has helped TikTok allay regulatory worries by routing its internet traffic through Oracle's Texas-based servers -- rather than letting the data go to China.

Is Oracle stock a buy?

And so today seems another good day for Oracle investors -- at least in the short term. Longer term, I still have concerns about the stock, which, although technically profitable, as measured by generally accepted accounting principles, or GAAP, burned nearly $6 billion in cash over the last 12 months as it invests heavily in artificial intelligence infrastructure.

Priced at 69x earnings and burning cash, ultra-popular Oracle still looks like a sell to me.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Oracle. The Motley Fool has a disclosure policy.