Oracle Stock Rises on Reported $7 Billion AI Cloud Deal with Tencent

Oracle Corp. (ORCL) shares climbed 1.6% in pre-open trading following a report that the company has secured a landmark $7 billion cloud computing deal with Chinese technology giant Tencent.

Tencent Inks Landmark AI Deal

According to the *Financial Times*, Tencent agreed to a five-year lease to access approximately 100,000 advanced AI chips through Oracle's data centers located in Southeast Asia. The deal is reportedly Tencent's largest-ever overseas compute agreement.

The arrangement allows Tencent to utilize cutting-edge chips that are subject to U.S. export restrictions and cannot be directly acquired in mainland China. The contract reportedly includes a significant upfront payment of around 30% of the total value.

Bolstering Oracle's Backlog

For Oracle, the deal represents a major addition to its already substantial cloud infrastructure backlog. The company's remaining performance obligations stood at $664 billion as of late August, and this new commitment further solidifies its future revenue stream.

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The agreement also serves as a key validation of Oracle's strategic investments in its Southeast Asian data center footprint, demonstrating strong international demand for its AI-focused cloud services.

Market Context and Analyst View

The news arrived amid a constructive start to the fourth quarter, with S&P 500 futures gaining 0.3% and providing a supportive backdrop for technology stocks. While analysts at Morgan Stanley maintain an Equal Weight rating on the stock, the firm's model points to approximately 50% upside, citing Oracle’s AI buildout as a key catalyst.

Investor sentiment was also buoyed by a separate report that OpenAI's annualized revenue is approaching $70 billion. This is seen as a positive indicator for infrastructure partners like Oracle, which supports OpenAI's Stargate AI initiative, and underscores the massive demand for AI computing power.