Microsoft is winding down a 2023 deal to rent AI cloud capacity from Oracle, Bloomberg reports
Microsoft is winding down a 2023 arrangement to rent AI computing capacity from Oracle after declining to renew the contract, Bloomberg reported, citing people familiar with the matter. The capacity, which supported Microsoft's AI-powered Bing search engine, used older-generation Nvidia chips that no longer fit Microsoft's specifications. Microsoft declined to comment. Oracle said demand for its AI infrastructure remains strong and that GPU capacity up for renewal in its first quarter was renewed or resold at a 20% premium for long-term contracts.
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Key takeaways
Microsoft is winding down a 2023 deal to rent AI computing capacity from Oracle, Bloomberg reported.
The capacity used older-generation Nvidia chips that no longer fit Microsoft's specifications, according to the report.
Bloomberg could not determine the contract's full size, and Microsoft declined to comment.
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Microsoft is winding down a 2023 deal to rent AI cloud capacity from Oracle, Bloomberg reported on Friday, citing people familiar with the matter. Microsoft has been turning off the rented capacity after declining to renew the contract, because the hardware used older-generation Nvidia chips, according to the report as relayed by Seeking Alpha and crypto.news.
The arrangement dates to 2023, when Oracle agreed to supply servers supporting Microsoft's AI-powered Bing search engine, crypto.news reported. The people told Bloomberg the capacity had become less useful as Microsoft's specifications changed. Bloomberg could not determine the full size of the contract, and Microsoft declined to comment.
Oracle says demand remains strong
Oracle responded on X that capacity coming up for renewal has found buyers at higher prices.
Demand for OCI's AI infrastructure remains strong, including for earlier-generation GPUs. As Clay shared on our latest earnings call, GPU capacity that came up for renewal in Q1 was renewed or resold at a 20% premium to prior pricing for long-term contracts. — Oracle, statement on X
A broader reshuffle of AI capacity
Bloomberg described the move as part of a larger reassessment of billions of dollars in cloud partnerships at Microsoft. Microsoft has committed more than $80 billion to renting capacity from cloud businesses including CoreWeave, Nscale and Nebius, Bloomberg has reported, according to crypto.news. Microsoft told Reuters its infrastructure strategy combines company-owned data centers, leased facilities and outside partnerships, crypto.news reported.
What enterprise IT buyers can watch
For companies buying AI compute, the report highlights how quickly GPU generations age out of a buyer's requirements, and Oracle's statement shows earlier-generation capacity still finding customers. The signals to watch are how much older-generation capacity returns to the market and at what price, and how large buyers like Microsoft split future AI workloads between their own data centers and rented capacity.
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