Microsoft winds down Oracle AI cloud deal over outdated Nvidia chips
For the head of tech-infrastructure lending at a regional bank
Microsoft is gradually ending a multiyear arrangement to rent AI computing capacity from Oracle, according to people familiar with the situation cited by Crowdfund Insider; Microsoft declined to comment.1
The report said Microsoft chose not to renew the underlying contract and has shut down the Oracle-supplied capacity in recent months, because the hardware used an earlier generation of Nvidia processors that no longer fit its AI workloads.1 The move is part of a wider review of Microsoft's external cloud commitments, which total more than $80 billion across various providers, according to the same report.1
The original agreement, announced in late 2023, gave Microsoft access to servers on Oracle Cloud Infrastructure to support an AI-enhanced version of Bing, working alongside Azure; the financial scale of the deal has not been disclosed.1
Microsoft declined to comment, and an Oracle spokesperson said interest in its AI infrastructure remains robust, including for graphics processing units from earlier generations.1
The report said Oracle has previously noted that certain older GPU contracts have been renewed or reallocated at a premium to prior pricing.1
Oracle's cloud revenue reached $18 billion in the fiscal year ending May 2026, and its shares fell roughly 3 percent on the news, according to the report.1
For banks and lenders financing or relying on AI data-center capacity, this shows that a long contract does not guarantee renewal if the chips become outdated. Credit, vendor and concentration reviews should test how long the hardware stays useful, not only the lease term.
Our take. A contract signed in late 2023 for scarce chips lapsed because the chips aged, while Oracle says older GPUs still renew at a premium. Your compute loans likely price the second story; underwrite the first.
Action. Tech and infrastructure lending: Re-test collateral values and renewal assumptions on data-centre and compute loans by GPU generation and lead-tenant contract end date.
What our records say
NVIDIA sells GPUs, DGX systems and a licensed AI software stack that banks run in their own data centres or rent in the cloud, and its bank customers on BankingNewsAI's pages include BNY, American Express, Capital One, PNC, Santander and Deutsche Bank.1 Strategy themes: The flagship software suite includes NeMo for building and customising generative models and Triton Inference Server for serving them, licensed per GPU and run on self-managed systems or cloud GPU instances.2
From our records
- NVIDIAvendor · banks using it (6) BNY, Amex, Capital One · alternatives SambaNova
Sources
- ReportMicrosoft winds down Oracle AI cloud deal over outdated Nvidia chips Crowdfundinsider