Microsoft winds down Oracle AI compute rental, reassesses $80B+ in outside cloud deals (Bloomberg, Nov 6)
What happened
Microsoft is winding down a 2023 arrangement to rent AI computing capacity from Oracle, Bloomberg reported on Friday, November 6, citing people familiar with the matter. Microsoft decided not to renew the contract and has spent recent months switching off the rented capacity, which was originally used to power the AI-assisted version of Bing, because the Oracle servers run an older generation of Nvidia chips that no longer meet Microsoft's evolving needs. The full size of the deal was never disclosed and could not be determined. Oracle responded that demand for its AI infrastructure remains strong, including for earlier-generation GPUs, saying GPU capacity that came up for renewal in its fiscal first quarter was renewed or resold at about a 20% premium to prior long-term pricing. Bloomberg framed the move as part of a wider Microsoft reassessment of the more than $80 billion it has committed to renting capacity from outside cloud providers, including CoreWeave, Nscale and Nebius.
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Start your free 14-day trialWho’s affected
- Oracle (ORCL) — directly losing a tenant for older-GPU capacity; shares fell to a 52-week low of $109.21 intraday Friday, down 5.2% from the November 5 close, before recovering to close at $116.10, up 0.82%. Microsoft (MSFT) — tightening oversight of outside capacity and reassessing $80B+ in commitments; shares little changed on the report. Neocloud/AI infrastructure names (CoreWeave, Nscale (private), Nebius, IREN) — Microsoft's review puts their contracted revenue under scrutiny
- IREN fell nearly 17% on Nov 5 after disclosing Microsoft deployment delays. Nvidia (NVDA) — the rented Oracle servers ran older-generation Nvidia chips, underscoring how fast prior-gen hardware loses hyperscaler demand.