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Older Nvidia Chips Just Cost Oracle Its Microsoft AI Deal
24/7 Wall St. • • business
Key Points:
- Oracle shares hit a 52-week low of $109.21 on November 6, 2026, following reports that Microsoft is ending its contract to rent AI computing capacity from Oracle due to outdated Nvidia hardware.
- Microsoft declined to renew the contract and has been phasing out Oracle's older GPUs, though Oracle maintains that demand and rental premiums for its older GPUs remain strong, with utilization at 97.9%.
- The original deal, announced in 2023 to support Microsoft's AI-powered Bing, was never fully disclosed in size or value; Microsoft is now focusing on newer GPU technology and consolidating cloud suppliers.
- Despite the contract loss, Oracle's cloud business continues to grow, driven by large AI clients like OpenAI, and the company expects strong fiscal 2027 revenue and earnings, suggesting the stock price already factors in much of the downside risk.
- Microsoft, with significant capital expenditures and diversified cloud partnerships, holds greater pricing power in AI infrastructure, while Oracle’s upcoming earnings report in December will be closely watched for signs of impact from the contract termination.
