Microsoft is winding down a 2023 deal to rent AI computing capacity from Oracle, Bloomberg reported on 6 November 2026, because the servers use older Nvidia chips that no longer meet Microsoft's needs. Oracle says demand for its AI infrastructure remains strong, and its shares fell about 3% on the news.
Key takeaways
- Microsoft declined to renew the 2023 contract and has been switching off the rented capacity in recent months.
- The deal supplied Oracle servers for Microsoft's AI-powered Bing search, and its full size has not been disclosed.
- Separate talks for Microsoft to lease more Oracle capacity collapsed in June, according to Business Insider.
- Microsoft is reassessing more than $80 billion of contracts with outside cloud providers, Bloomberg reported.
Why Microsoft is ending the Oracle AI cloud deal
According to the report, the Oracle servers ran older-generation Nvidia chips that no longer matched Microsoft's specifications. A rental signed in the 2023 scramble for graphics processing units, or GPUs, was priced against 2023 alternatives, and newer chips have since moved the goalposts. Oracle's response was that demand for its AI infrastructure remains strong, including for earlier-generation GPUs.
A wider rethink of outside cloud capacity
Bloomberg says Microsoft has committed more than $80 billion to rent capacity from providers including CoreWeave, Nscale and Nebius, and has tightened oversight of data-centre construction and withdrawn from projects it considers risky. Microsoft also recently passed on an option to expand a Texas deal with Nscale. This is not a sign that AI demand has vanished. It looks more like a large buyer being selective about whose infrastructure it pays for.
Oracle's position
Oracle's heavy data-centre spending has pushed its free cash flow negative, and daily.dev reports its credit rating sits one notch above junk and its shares have more than halved since a June peak. Startup Fortune notes that talks over a $10 billion data-centre financing in Michigan have reportedly stalled. Those details come from secondary reports and are not confirmed by the companies.
Why chip age matters
Research firm Gartner has warned that much AI infrastructure spending could face large write-downs as newer chips arrive. If older GPUs lose value faster than expected, landlords and lenders who financed them carry the risk. That links to the concern in our report on Big Tech's $3.2 trillion in AI commitments, and to the market jitters we covered in Wall Street's AI chip sell-off.
Frequently asked questions
Is Microsoft leaving Oracle completely?
No. Reports describe winding down one 2023 rental for AI Bing capacity, not ending all Microsoft and Oracle business.
Why were the Nvidia chips a problem?
Bloomberg's sources said the older-generation chips no longer matched what Microsoft needed for its AI workloads.
Does this mean the AI boom is over?
Not on this evidence. It shows large buyers choosing newer hardware and reviewing contracts, which is different from cutting AI spending overall.
This article is a news report and not investment advice.
Sources: Bloomberg (6 November 2026), via The Next Web, MarketScale, Crypto.news and Startup Fortune; FourWeekMBA; Daily.dev; Shattered.io.
