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Bloomberg’s sources say the rented hardware no longer fit Microsoft’s specifications. Oracle says demand remains strong, including for older chips.
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The rental arrangement began in 2023, when Microsoft needed extra capacity for an AI-assisted Bing, but Oracle’s older-generation Nvidia hardware no longer met Microsoft’s specifications. Bloomberg reports Microsoft has been switching off that capacity in recent months and did not renew the contract; Oracle’s shares fell 4% after the report. The deal’s value is unknown, and Microsoft’s broader review covers billions of dollars in cloud partnerships—not necessarily this contract. The episode highlights how quickly AI hardware requirements can change, even as Oracle says demand for older GPUs remains strong.
Microsoft declined to comment, while Bloomberg cited anonymous people familiar with the private matter.
Oracle said it was renewing contracts for four-year-old GPUs at a 20% premium to original deal prices; it did not tie that claim to Microsoft.
The 4% share decline followed Bloomberg’s report, but the contract’s financial impact remains unclear because its full value could not be determined.
Microsoft is turning off AI computing capacity rented from Oracle after declining to renew the contract, Bloomberg reported on November 6. Oracle shares fell 4% following the report. The reported reason centers on hardware that no longer fit Microsoft’s needs, putting the usefulness of older AI chips under fresh scrutiny.
The arrangement dates to 2023, when Microsoft sought additional computing power for an AI-assisted version of its Bing search engine. It was an unusual way to meet that need: Microsoft rented servers from a major cloud competitor while demand for AI computing capacity was outstripping supply.
Microsoft has been switching off the rented capacity in recent months, people familiar with the matter told Bloomberg’s Brody Ford. They spoke anonymously because the matter was private.
The rented computing became less useful over time because it no longer matched Microsoft’s specifications, those people said. Oracle’s hardware used older-generation Nvidia chips.
Bloomberg placed the wind-down within a larger reassessment of billions of dollars in Microsoft cloud partnerships. That figure describes the broader review, not the disclosed size of this Oracle contract. Microsoft declined to comment on the reported wind-down.
Oracle shares fell 4% on Friday following Bloomberg’s report, according to Investing.com.
Oracle’s response focused on demand beyond this customer’s requirements. A spokesperson said demand for its AI infrastructure remained strong, including for earlier-generation graphics processing units, or GPUs.
The company had offered a concrete pricing claim in September: it said it was renewing contracts for four-year-old GPUs at a 20% premium to their original deal prices. That pricing claim was not identified as applying to Microsoft’s arrangement.
Oracle’s claim of strong demand does not resolve the financial impact of this departure. Bloomberg could not determine the full value of the Microsoft arrangement, leaving the size of the business at stake unclear.
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