Microsoft reportedly gradually terminates its leasing of AI computing power from Oracle

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Foreign media: Microsoft gradually terminates its agreement with Oracle AI computing power leasing agreement

BlockBeats News,November 7, according to foreign media citing people familiar with the matter, Microsoft (MSFT.O) has stopped renewing its agreements with Oracle (ORCL.N) for AI computing power leases and has gradually shut down the leased computing resources in recent months. People familiar with the matter said that the servers provided by Oracle use an older generation of Nvidia (NVDA.O) chips, which no longer meet Microsoft's current technical specifications. The two parties reached the agreement in 2023 to provide computing power for the new version of AI search engine Bing; the specific contract amount is unknown.

Oracle responded that demand for its AI infrastructure remains strong and that the older generation of GPU still has a market. Microsoft is reassessing external AI computing power partnerships, having previously committed more than CRWV.O), Nscale, and Nebius (NBIS.O), among other emerging cloud service providers, to spending on computing power leases exceeding 80000000000 USD.

Previous reports said Microsoft's management has become increasingly dissatisfied with the high costs and project delays of certain suppliers. It has recently intensified its review of data center projects, exited some high-risk projects, and reconsidered whether to enter into new computing power partnership agreements. Meanwhile, Oracle's cloud business has expanded rapidly, but heavy capital expenditures have pushed free cash flow negative, intensifying investor concerns over returns on its AI infrastructure investments; its share price has fallen by more than half from this year's high.

Affected by the news, Oracle's share price quickly turned lower intraday, with losses at one point widening to 4.6%, before closing up 0.74%.

Original link https://m.theblockbeats.info/flash/376048

Key points

Microsoft has stopped renewing its AI computing power lease agreements with Oracle and has gradually shut down the leased computing resources in recent months.
People familiar with the matter said Oracle's servers use an older generation of Nvidia chips that no longer meet Microsoft's current technical specifications.
The two parties reached an agreement in 2023 to provide computing power for the new version of Bing; the specific contract amount is unknown.
Oracle said demand for its AI infrastructure remains strong, and the older generation of GPU still has a market.
Microsoft previously committed more than 80000000000 USD in computing power lease spending to providers including CoreWeave, Nscale, and Nebius.
Affected by the news, Oracle's intraday share-price decline at one point widened to 4.6%, before closing up 0.74%。

AI-assisted interpretation

The following is analysis, separate from reported facts. Verify important claims independently.

The report said Microsoft is reducing its use of some AI computing resources from Oracle because the relevant chips are older. Oracle stated that the older generation of GPU still has a market, but the contract scope and amount have not been disclosed.

Why it matters to readers

This may affect the market's assessment of Oracle's AI cloud computing power demand and investment returns; the execution of Microsoft's subsequent replacement computing power partnerships also warrants attention.

Computing power leasing refers to a company renting chips and servers from cloud service providers to operate AI services. Changes in suppliers may affect costs, technical compatibility, and capacity-expansion arrangements.

Risks and unknowns

The report cited people familiar with the matter; Microsoft and Oracle have not formally confirmed in the evidence the specific scope of the contract termination.
The contract amount, termination timetable, and actual impact on both companies' businesses are unknown.
The evidence does not state whether Microsoft's replacement computing power resources can meet demand on time.
Share-price movements alone cannot prove that contract adjustments caused a long-term impact.

Microsoft reportedly gradually terminates its leasing of AI computing power from Oracle

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