Microsoft ends Oracle AI cloud deal, impacting tech market
4.1 Tech Microsoft is ending its AI cloud deal with Oracle due to outdated hardware and shifting needs. Oracle’s shares fell 4%, but it claims strong demand for its AI services. Microsoft is reassessing cloud partnerships.
Microsoft is ending its AI cloud computing arrangement with Oracle, gradually phasing out rented capacity that relied on older Nvidia chips. This move comes as the hardware no longer meets Microsoft’s evolving technical requirements, and concerns have grown over supplier costs and delivery delays. The original agreement, established in 2023 to support AI-powered Bing, was not renewed. Microsoft has been reevaluating its external cloud partnerships, committing over $80 billion to other providers. Following the announcement, Oracle’s shares dropped nearly 4%, sparking market concerns about the sustainability of tech spending. Despite this, Oracle maintains that demand for its AI infrastructure, including older GPUs, remains strong, with some capacity renewed or resold at a premium. No formal multi-year contract was ever signed, and Oracle disputes some details of the reporting, emphasizing ongoing collaboration with Microsoft. This decision highlights Microsoft’s broader strategic review of its cloud partnerships and focus on resource optimization.
