Microsoft Is Winding Down Its Deal with Oracle on AI Computing Power — Bloomberg

Microsoft is winding down a deal with Oracle to lease computing power for artificial intelligence, according to Bloomberg sources. This is part of a broader reassessment of the company’s approach to the billions of dollars it spends on contracts with cloud partners, the news agency reports.

In recent months, Microsoft has been gradually shutting down the computing capacity it leased from Oracle after refusing to renew its contract with the company, according to sources who spoke with Bloomberg.

Over time, these computing resources ceased to meet Microsoft's requirements, as Oracle's hardware ran on previous-generation Nvidia chips, according to the agency's sources.

Demand for Oracle's AI infrastructure remains high, including for systems equipped with earlier-generation graphics processing units, an Oracle spokesperson told Bloomberg. Microsoft declined to comment.

Oracle shares plunged 5% immediately after the Bloomberg report was published, falling to a nearly three-year low, although they later recouped some of their losses. Prior to the drop, the stock had actually been rising—by as much as 4% at its peak. Microsoft shares fell 0.7% during trading on November 6.

The companies announced their partnership in 2023: Oracle agreed to provide Microsoft with access to servers to run the new version of the Bing search engine, which features AI capabilities. The total value of the deal was not disclosed.

In recent months, Microsoft has become disillusioned with its strategy of leasing computing power from other companies and has stepped up oversight of data center projects being built by its partners under contracts with the company, Bloomberg reported on November 5, citing sources. According to the sources, the company has begun to reject projects it considers risky, and its leadership is holding internal discussions about whether to enter into new deals with so-called “neo-clouds.” The reasons include project delays, regulatory hurdles, and high costs.

At the same time, Microsoft, the world’s largest software maker, has become one of the driving forces behind the boom in non-cloud companies by signing large-scale contracts with CoreWeave, Nscale, IREN, and Nebius: Bloomberg estimates that the company has committed to spending a total of more than $80 billion on leasing third-party computing power to support its own AI projects.

Oracle’s cloud business has grown rapidly since 2023, thanks in part to major AI contracts with OpenAI and Meta: for the fiscal year ending in May 2026, revenue from this segment reached $18 billion. Initially, the company was considered one of the main beneficiaries of the AI boom, but Oracle investors are now concerned about high capital expenditures, which have caused its free cash flow to turn negative.

Oracle shares are currently trading at a 41% discount compared to their price at the beginning of 2026. But the most common analyst recommendation for them is to buy: the stock has 36 Buy and Overweight ratings combined, compared to seven Hold ratings and just one Sell rating, according to MarketWatch. By comparison, Microsoft shares rose 10% in 2026 and have 58 buy recommendations and five hold recommendations.

This article was AI-translated and verified by a human editor