Why is Microsoft ending its Oracle AI capacity deal?

People familiar with the matter said Oracle's hardware ran on older Nvidia chips that no longer met Microsoft's specifications. Microsoft declined to comment.

How is Oracle responding to the loss of the Microsoft contract?

An Oracle spokesperson said demand for its AI infrastructure remains strong, including for earlier-generation GPUs. In September, Oracle said renewed GPUs were rented at a 20% premium, with most being 4 years or older.

What does the Microsoft contract loss mean for Oracle's financials?

Oracle's cloud business brought in $18 billion in the year ended May 2026, mostly from larger AI contracts like OpenAI. Oracle expects at least $90 billion in fiscal 2027 revenue and non-GAAP EPS of $8.10.

AI Stocks & MarketsAI Business & IndustryYahoo Finance AI15m agoNov 8, 2026, 04:00 JST

Oracle hits 52-week low of $109.21 as Microsoft ends AI capacity deal

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3 Key Points

What happened
People familiar said Microsoft declined to renew the 2023 Oracle contract and spent recent months switching capacity off, because Oracle's servers used older Nvidia chips below Microsoft's specifications.
Why it matters
Oracle's stock has lost more than half its value since its June 1 high of $248.15, and buyers stepping in near the low suggest the market had already expected bad news like this.

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Context & Analysis

The deal, announced in 2023, gave Microsoft server access to run the then-new AI version of Bing. At the time, renting computing power from a rival looked like an early sign of an AI chip shortage, and the contract's full size and value were never disclosed.

Microsoft has since committed more than $80 billion to renting capacity from other cloud providers, including CoreWeave and Nebius, but plans to cut that list down to a few key suppliers. It spent $45.2 billion on capital expenditures in its September quarter, and Nvidia GB300 systems now make up most of its GPU fleet. CoreWeave said 62% of its 2024 revenue came from Microsoft.

Oracle, meanwhile, reported negative free cash flow of -$5.396 billion last quarter, so every renewal it loses may hurt more than it once did. The stock fell 6.93% on November 5, the same day the Philadelphia Semiconductor Index dropped 12%, its steepest fall since March 2020.

FAQ

Why is Microsoft ending its Oracle AI capacity deal?: People familiar with the matter said Oracle's hardware ran on older Nvidia chips that no longer met Microsoft's specifications. Microsoft declined to comment.
How is Oracle responding to the loss of the Microsoft contract?: An Oracle spokesperson said demand for its AI infrastructure remains strong, including for earlier-generation GPUs. In September, Oracle said renewed GPUs were rented at a 20% premium, with most being 4 years or older.
What does the Microsoft contract loss mean for Oracle's financials?: Oracle's cloud business brought in $18 billion in the year ended May 2026, mostly from larger AI contracts like OpenAI. Oracle expects at least $90 billion in fiscal 2027 revenue and non-GAAP EPS of $8.10.

Yahoo Finance AIRead Original Article

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