Microsoft Scales Back Oracle AI Cloud Leases as Demand Shifts

At a glance

Microsoft is gradually reducing the AI computing capacity it rents from Oracle. It declined to renew a contract signed in 2023 and has reportedly been shutting off rented capacity over recent months. Bloomberg reported the news on the 6th, citing people familiar with the matter.

Key points

1. 1

   Sources said Oracle's equipment uses older Nvidia chips, making it no longer suited to Microsoft's changed demand.

2. 2

   Oracle said demand remains strong, including for older GPUs (graphics processing units, chips used for AI computing).

3. 3

   Microsoft is also reviewing its contracts with neocloud providers, new cloud companies that rent out GPU computing.

4. 4

   IREN said some infrastructure deliveries were delayed because Microsoft requested changes to the network design.

Why it matters

Major cloud contracts that support AI services are wavering, which shows how demand is shifting across the AI industry.