Microsoft is winding down an arrangement to rent artificial intelligence computing capacity from Oracle, Bloomberg News reported on Friday, as the software giant reassesses billions of dollars in cloud partnerships.
Microsoft has been switching off the rented capacity in recent months after declining to renew the contract, according to the report, which cited people familiar with the matter. The hardware involved used an older generation of Nvidia chips and, over time, no longer met Microsoft’s evolving needs.
The arrangement dates back to 2023, when Oracle agreed to supply servers to support an AI-powered version of Microsoft’s Bing search engine. At the time, the idea of Microsoft renting servers from a direct rival was taken as an early sign of just how short the world was of computing power. The full size of the contract was never disclosed, and Bloomberg said it could not determine its value.
The wind-down is part of a wider rethink of Microsoft’s cloud spending. The company has committed more than $80 billion to renting computing capacity from outside providers, including CoreWeave, Nscale and Nebius, to support its AI operations. Separate reporting by CNBC said Microsoft is now shrinking the number of specialist “neocloud” partners it uses and is prioritising its own data centre footprint, with senior leaders said to be frustrated by high costs and delays.
Oracle’s shares fell nearly 3 per cent in afternoon trading after the report, while Microsoft was little changed. The market reaction underlines how closely investors are now watching AI infrastructure spending, after a week in which the Nasdaq fell into correction territory and data-centre and chip stocks sold off sharply following the Democrats’ sweep of the US midterm elections.
Oracle pushed back on the suggestion that demand for its older hardware is fading. A spokesperson told Bloomberg that demand for its AI infrastructure “remains strong”, and on its earnings call in September the company said graphics processors that came up for renewal in the first quarter were renewed or resold at a 20 per cent premium to their original contracts.
There were other signs of Microsoft tightening its grip on outside capacity this week. IREN, a data centre developer tied to Microsoft, said on Thursday it had delayed some infrastructure deliveries after Microsoft requested changes to its network design, pushing back the timetable for bringing more than $4 billion of annualised revenue capacity online.
Note: this story is based on a single report by Bloomberg News, citing unnamed people familiar with the matter. Microsoft declined to comment, and neither Microsoft nor Oracle has publicly confirmed the wind-down, so the details have not been independently verified.
Sources: Reuters, “Microsoft is winding down Oracle deal to rent AI cloud capacity, Bloomberg News reports”, https://www.reuters.com/business/microsoft-is-winding-down-oracle-deal-rent-ai-cloud-capacity-bloomberg-news-2026-11-06/ ; Bloomberg News, as reported by Reuters.
