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Microsoft is winding down Oracle deal to rent AI cloud capacity, Bloomberg News reports
Microsoft is winding down its arrangement to rent AI computing capacity from Oracle, according to a Bloomberg report citing people familiar with the matter. The move forms part of a broader review of Microsoft’s cloud partnerships and suggests it is adjusting how it secures computing for its substantial AI investments.
Microsoft reportedly declined to renew the contract and has been switching off rented capacity in recent months because the older-generation Nvidia hardware no longer met its changing needs. Oracle shares fell nearly 3 per cent after the report, while Microsoft’s share price was little changed; neither company immediately commented. Separately, infrastructure provider IREN said requested network design changes from Microsoft delayed deliveries, pushing back its target to bring more than $4 billion in annualised revenue capacity online from year-end to January, with a possible further delay to late February.
In short
- Microsoft is ending its Oracle AI computing rental arrangement.
- Older Nvidia hardware reportedly no longer met Microsoft’s needs.
- Microsoft’s requested network changes also delayed IREN’s capacity plans.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Ending the Oracle arrangement could let Microsoft redirect spending towards newer Nvidia systems and infrastructure better suited to its evolving AI workloads. A broader review of cloud partnerships may also help it manage costs and reduce reliance on capacity that no longer meets its needs.
The case against
Switching off rented capacity may constrain Microsoft’s ability to scale AI services quickly if its own infrastructure or replacement arrangements are not ready. The reported delays to IREN’s deliveries also point to the practical risks of changing network requirements, while ending a partnership could reduce flexibility in securing computing capacity.