Microsoft did not renew its artificial intelligence computing resource lease with Oracle after the contract expired, according to sources cited by Bloomberg on Nov 6. The tech giant has gradually phased out related resources in recent months because Oracle's equipment uses older-generation NVIDIA chips that no longer meet Microsoft's evolving AI computing needs. The news intensified market concerns about the effectiveness of AI infrastructure investments, causing Oracle stocks to drop over 5% intraday on Nov 6 before closing in positive territory.

Microsoft and Oracle Announced Multi-Year Cloud Cooperation in 2023

Microsoft and Oracle announced a multi-year cooperation in 2023, under which Microsoft leased Oracle Cloud Infrastructure (OCI) to support its AI-powered Bing search engine. The contract amount was not disclosed at the time of the announcement.

Bloomberg reported on Nov 6 that informed sources revealed the AI computing lease contract between Microsoft and Oracle expired and was not renewed. Microsoft has gradually stopped using related resources in recent months.

Oracle Responds to Contract Non-Renewal Reports

In response to the reports, Oracle stated that market demand for its OCI cloud service platform remains strong, including for older-generation NVIDIA GPUs. Microsoft did not immediately respond to the related reports.

AI cloud service provider IREN recently disclosed that delivery timelines for some infrastructure were delayed because Microsoft requested adjustments to network design. Bloomberg separately reported that Microsoft is strengthening oversight of data center construction projects undertaken by vendors including IREN and Nebius, facing rising costs and engineering delays.

Oracle Stocks Experience Sharp Volatility Following News

Oracle stock prices fell 6.93% on Nov 5. On Nov 6, affected by news of the Microsoft cooperation, the stock dropped to an intraday low of $109.21 before recovering to close up 0.82% at $116.10.

Market concerns about stricter regulation of data center expansion following the Democratic Party's victory in midterm elections, combined with questions about the effectiveness of AI infrastructure investments, have put heavy selling pressure on technology stocks.

Oracle stock price chart

FAQ

Why did Microsoft not renew its AI computing lease with Oracle?

Microsoft did not renew the lease because Oracle's equipment uses older-generation NVIDIA chips that no longer meet Microsoft's evolving AI computing needs, according to sources cited by Bloomberg on Nov 6.

How did Oracle stocks react to the Microsoft contract news?

Oracle stocks dropped over 5% intraday on Nov 6 following the news but recovered to close up 0.82% at $116.10. The stock had previously fallen 6.93% on Nov 5.

What did Oracle say about the contract non-renewal?

Oracle responded that market demand for its OCI cloud service platform remains strong, including for older-generation NVIDIA GPUs.

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