Key Notes
- Microsoft is winding down an Oracle AI computing arrangement as older Nvidia hardware no longer meets its requirements, Bloomberg reports.
- Oracle says capacity renewed or resold in its fiscal first quarter fetched a 20% premium under long-term contracts despite the age of many GPUs.
- ORCL recovered from a 5.2% intraday drop to close 0.8% higher at $116.10, still 66.4% below its September 2025 record.
Microsoft Corp. (Nasdaq: MSFT) is winding down an agreement to rent AI computing capacity from Oracle Corp. (NYSE: ORCL) after deciding against renewal, Bloomberg reported Friday. Microsoft has been switching off the rented capacity in recent months as the older hardware became less useful for its requirements, according to people familiar with the arrangement.
Oracle pushed back on the broader demand concern. In a statement Friday, it said GPU capacity coming up for renewal in its fiscal first quarter had been renewed or resold under long-term contracts at a 20% premium to previous pricing, even though most of those processors were at least four years old.
The news briefly deepened Oracle’s stock-market slump. Shares fell more than 5% during the session before recovering to finish higher. GPU rental income has to cover equipment, financing and operating costs even as newer chips become available.
Demand for OCI’s AI infrastructure remains strong, including for earlier-generation GPUs.
— Oracle (@Oracle) November 6, 2026
The AI Computing Deal Began With Bing
Oracle announced the multiyear agreement in November 2023, when demand for generative AI was putting pressure on computing supply. Microsoft used Oracle Cloud Infrastructure alongside its own Azure infrastructure to run the models supporting Bing’s conversational search.
The work involved inference: running a model to produce responses, rather than training it from scratch. Microsoft could coordinate the Oracle capacity through the companies’ cloud interconnection and Azure management tools.
The rented servers used older-generation chips from Nvidia (Nasdaq: NVDA), and the equipment no longer matched Microsoft’s specifications, according to Bloomberg. The report did not identify a chip model or establish the full value of the agreement. Microsoft declined to comment.
Oracle has not disclosed how much revenue the contract contributed. The effect on its accounts will depend on what Microsoft was paying and how quickly replacement customers fill the capacity.
Oracle Defends the Value of Older GPUs
Oracle’s response draws a distinction between a chip’s age and its ability to earn revenue. A processor that no longer suits one customer’s requirements can still have value for another workload. The company’s claim of higher rents points to its ability to place older capacity with paying customers.
The statement covers capacity renewed or resold during the fiscal first quarter, which ended August 31. It does not identify the servers Microsoft returned or say whether those specific machines have been placed with replacement customers.
Oracle’s latest earnings release shows why utilization matters. Cloud infrastructure revenue rose 121% to $7.4 billion in that quarter, but capital expenditure reached $28.5 billion. Free cash flow was negative $5.4 billion despite substantial operating cash inflows.
Its subsequent funding plan reaffirmed at least $90 billion in fiscal 2027 revenue and outlined a $20 billion limit on additional capital-market funding through fiscal 2030, excluding refinancing. The pricing and length of replacement contracts will determine how much cash the older capacity keeps bringing in.
Microsoft Reassesses Suppliers While Spending Heavily
The Oracle decision sits within a broader review of outside cloud partnerships. Bloomberg reported that Microsoft has committed more than $80 billion to capacity from other providers and that senior executives have become frustrated with costs and delivery delays.
Microsoft’s own earnings commentary describes continued large-scale investment. Capital expenditure, including finance leases, was $45.2 billion in the September quarter, with roughly three-quarters directed toward shorter-lived assets, primarily CPUs and GPUs. Management expects spending above $50 billion in the December quarter.
Microsoft also said some third-party capacity deliveries expected in the September quarter had been delayed. That timing issue helped drive the earlier selloff in suppliers after its results.
Existing equipment and unfinished projects create different pressures. A customer can stop renewing hardware that no longer fits its needs while continuing to invest in newer capacity. Meanwhile, delayed delivery postpones both a supplier’s revenue and the customer’s ability to use the infrastructure it ordered.
ORCL Recovers From Its Intraday Low
Oracle fell to $109.21 at about 12:38 p.m. Eastern, or 17:38 UTC, on November 6, down 5.2% from Thursday’s close. It later finished at $116.10, up 0.8%, according to Yahoo Finance data. Microsoft closed at $530.61, down about 1%.
At Friday’s low, Oracle was 68.4% below its $345.72 record reached in September 2025. The closing recovery narrowed that drawdown to 66.4%.
Friday’s rebound erased the day’s decline. It did little to repair the longer slide: Oracle would still need to gain almost 198% from its closing price to regain that record.
