(Bloomberg) — Oracle Corp. (ORCL) shares tumbled after a report that the software maker’s profit margin in its cloud computing business is lower than many on Wall Street have been estimating.
While Oracle generated roughly $900 million in revenue from the rental of servers powered by Nvidia Corp. chips during the three months ended in August, the company only managed about $125 million in gross profit, the Information reported, citing internal corporate documents. Oracle shares fell as much as 7.1% on Tuesday, while Nvidia fell about 0.6%, erasing an earlier gain of nearly 2%.
In some cases, Oracle was losing “considerable” amounts of money on its rentals of smaller quantities of Nvidia chips, including both new and old graphics processing units, according to the report. A spokesperson for Oracle declined to comment.
Oracle shares have jumped more than 60% this year as soaring demand for artificial intelligence computing has boosted the company’s revenue growth. Last month, Oracle projected revenue in its cloud-computing business will jump 700% in the next three fiscal years, sending the stock up 36% on Sept. 10.
The heavy spending required to acquire chips and build out data center capacity has weighed on Oracle’s overall gross margin, which excludes operating expenses. In its most recent earnings report, Oracle’s gross margin was 67.3%, the lowest in more than a year, according to data compiled by Bloomberg.
Bloomberg reported previously that Oracle signed a deal with ChatGPT operator OpenAI to supply 4.5 gigawatts’ worth of data center capacity — enough energy to power millions of American homes. The company is also part of a consortium of buyers that are nearing an agreement to buy the US operations of social media platform TikTok.
—With assistance from Brody Ford.
©2025 Bloomberg L.P.
(Bloomberg) — Oracle Corp. (ORCL) shares tumbled after a report that the software maker’s profit margin in its cloud computing business is lower than many on Wall Street have been estimating.
While Oracle generated roughly $900 million in revenue from the rental of servers powered by Nvidia Corp. chips during the three months ended in August, the company only managed about $125 million in gross profit, the Information reported, citing internal corporate documents. Oracle shares fell as much as 7.1% on Tuesday, while Nvidia fell about 0.6%, erasing an earlier gain of nearly 2%.
In some cases, Oracle was losing “considerable” amounts of money on its rentals of smaller quantities of Nvidia chips, including both new and old graphics processing units, according to the report. A spokesperson for Oracle declined to comment.
Oracle shares have jumped more than 60% this year as soaring demand for artificial intelligence computing has boosted the company’s revenue growth. Last month, Oracle projected revenue in its cloud-computing business will jump 700% in the next three fiscal years, sending the stock up 36% on Sept. 10.
The heavy spending required to acquire chips and build out data center capacity has weighed on Oracle’s overall gross margin, which excludes operating expenses. In its most recent earnings report, Oracle’s gross margin was 67.3%, the lowest in more than a year, according to data compiled by Bloomberg.
Bloomberg reported previously that Oracle signed a deal with ChatGPT operator OpenAI to supply 4.5 gigawatts’ worth of data center capacity — enough energy to power millions of American homes. The company is also part of a consortium of buyers that are nearing an agreement to buy the US operations of social media platform TikTok.
—With assistance from Brody Ford.
©2025 Bloomberg L.P.
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