Microsoft Ends Oracle AI Capacity Deal Over Older Nvidia Chips

Microsoft is winding down a 2023 agreement to rent AI computing capacity from Oracle after deciding not to renew the contract, according to people familiar with the matter cited by Bloomberg. The software giant has spent recent months switching off the rented capacity because the Oracle hardware runs on older Nvidia GPUs that "no longer met Microsoft's specifications" for its AI workloads [1]. The specific chip generation was not disclosed. Microsoft declined to comment.

The 2023 Deal and Its Limits

The arrangement was announced in 2023 to provide Microsoft with server access for the then-new AI version of Bing. Its full size and value were never disclosed [1][3]. At the time, renting from a rival cloud provider was seen as a sign of the acute GPU shortage. Three years later, Microsoft is letting the contract lapse without public explanation.

Microsoft's Stated Reason: Hardware Specifications

Bloomberg's sources said the decision was driven by a specification mismatch — the older Nvidia chips in Oracle's fleet no longer fit what Microsoft needs for its AI workloads [1][3]. The reporting does not say that weaker AI demand drove the move, nor does it name the chip model or count involved [3]. The Next Web and Finimize confirmed the thrust of the story the same day [3].

Oracle's Response: Demand Remains Strong

An Oracle spokesperson said demand for its AI infrastructure "remains strong," including for earlier-generation GPUs [1][2][3][4]. In September, Oracle said GPUs coming up for renewal were renewed or rented to new customers at a 20% premium to prior pricing, adding that "the majority of those GPUs are 4 years or older" [1][2][3][4]. Fleet utilization was 97.9% that quarter [1]. Oracle did not say the Microsoft block specifically was resold at that premium [3].

Microsoft's Broader Infrastructure Shift

The wind-down fits a wider pattern. Microsoft spent $45.2 billion on capital expenditures in its September quarter, and Nvidia GB300 systems now make up most of its GPU fleet [1]. It has also committed more than $80 billion to renting capacity from other providers, including CoreWeave and Nebius, though it plans to consolidate that list to a few key suppliers [1]. CoreWeave said 62% of its 2024 revenue came from Microsoft [1]. For the biggest buyer, the shortage that motivated the Bing deal has eased, giving Microsoft more pricing leverage [1].

What Remains Unknown

• The deal's total dollar value, start and end dates, capacity volume, and pricing [1][3]
• The exact Nvidia chip model and count involved [1][3]
• How many Microsoft workloads were affected [3]
• Whether the Microsoft capacity has been re-let [3]

Market Reaction

Oracle shares fell to $109.21 on November 6, a 52-week low about 5.2% below the prior close, then recovered to close at $116.01, up 0.74% [1]. A separate report put the close at $116.10, up 0.8% [2]. The stock has lost more than half its value since a June 1 high of $248.15 [1]; a separate peak of $328.33 was recorded on September 10, 2025 [2]. Oracle's free cash flow was -$5.396 billion last quarter [1]. Microsoft shares fell 0.99% to $530.61 with no reported cause [1].

What to Watch

Oracle expects at least $90 billion in fiscal 2027 revenue and non-GAAP EPS of $8.10 [1]. Its next earnings report is expected around December 9 [1]. Falling fleet utilization, a vanishing renewal premium, or a close below $109.21 would undercut the view that older GPUs still find paying customers [1]. CoreWeave reports November 10; Nvidia reports November 17 [1].