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Oracle Stock Faces a Minor Dip Amid Government Discount Deal
Oracle’s stock experienced a slight decline in Monday morning trading after reports surfaced that the company would offer significant discounts on its services to the U.S. government. This marks a brief pause in what had been a strong upward trend for the enterprise technology giant, which saw shares surge by 13% the previous week.
According to a report from the Wall Street Journal, Oracle is providing the U.S. government with a 75% discount on its license-based software and a “substantial” discount on cloud services through the end of November. The deal, facilitated by the General Services Administration (GSA), is being described as a first-of-its-kind agreement aimed at offering the entire government access to discounted cloud infrastructure.
This move comes amid ongoing efforts by the Trump administration to reduce IT-related costs, a focus that began under the Department of Government Efficiency (DOGE), led by Elon Musk. Although Musk has since stepped away from the administration, these cost-cutting initiatives continue to shape the landscape of federal tech contracts.
In addition to Oracle, companies like Salesforce, Adobe, and Elastic have also entered into agreements to offer software license discounts. However, Oracle’s deal stands out as it specifically targets cloud infrastructure, signaling a strategic shift in how the company approaches government contracts.
Meanwhile, another development involving Oracle has captured attention. According to a report from The Information, an agreement to sell TikTok to a group of investors that includes Oracle is nearing completion. As part of this deal, TikTok is expected to launch a new U.S. version of its app. Currently, the app remains available to Americans under a temporary reprieve from a 2024 law that bans the short-video platform unless ByteDance, its parent company, divests ownership. Oracle’s involvement in this deal would see its stake in TikTok reduced to below 20%, meeting the legal requirement.
Oracle’s Strong Performance and Future Outlook
Despite the recent dip, Oracle’s stock remains near record highs. The company’s recent rally was fueled by a regulatory filing last Monday, in which Oracle announced “multiple large cloud services agreements.” One of these deals is estimated to generate $30 billion in annual revenue starting in fiscal 2028. While the specific client behind this deal has not been named, Bloomberg reported that OpenAI, the creator of ChatGPT, has agreed to rent additional cloud capacity from Oracle as part of its Stargate partnership. This deal is believed to be a significant component of the disclosed contract.
The announcement has bolstered investor confidence in Oracle’s ability to compete with industry giants like Amazon and Microsoft in the AI cloud-computing space. Oracle has projected that cloud infrastructure revenue will grow by 70% during fiscal 2026. In its most recent fiscal Q4 earnings report, the company revealed that total cloud infrastructure revenue for the 2025 fiscal year reached $10.3 billion.
Oracle CEO Safra Catz expressed enthusiasm about the government deal, stating that the company is “thrilled to work with the GSA to help every department and agency modernize their technology and gain the benefits of Oracle Cloud and AI.”
Market Performance and Investor Sentiment
As of Monday morning, Oracle’s stock was up 39% year-to-date. Last year, the company posted a remarkable 60% increase in share price, marking its best performance since 1999. Despite the recent pullback, the overall trajectory of Oracle’s stock remains positive, driven by its expanding cloud business and strategic partnerships.
Investors are closely watching Oracle’s progress as it continues to navigate the evolving tech landscape. With its growing presence in both government contracts and private-sector AI-driven cloud solutions, the company is well-positioned to maintain its momentum in the coming months.
