A deal struck for Bing's AI era

Microsoft is winding down an arrangement to rent artificial intelligence computing capacity from Oracle, Bloomberg News reported on Friday, 6 November, citing people familiar with the matter. The move is part of a wider reassessment of billions of dollars in cloud partnerships, as Microsoft reviews the outside capacity it rents to power its AI services.

Older chips no longer fit

Microsoft has been switching off the rented capacity in recent months after deciding not to renew the contract, according to the report. The servers ran an older generation of Nvidia chips that no longer matched the company's changing needs. The original multi-year agreement was announced in 2023, when Microsoft turned to Oracle Cloud Infrastructure to support AI features in its Bing search engine. The full value of the deal was never disclosed.

Shares react, and a wider review

Oracle shares fell nearly 3% in afternoon trading after the report, before recovering to close at $116.10, up 0.8% on the day. Microsoft shares slipped about 1%. Microsoft declined to comment on the report. Oracle said demand for its AI infrastructure remains strong, including for earlier-generation graphics processors. Bloomberg reported that the review extends to more than $80 billion Microsoft has committed to renting capacity from outside providers such as CoreWeave, Nscale and Nebius, whose costs and delivery delays have frustrated its leadership. The episode shows how quickly AI hardware ages: capacity rented to meet one year's needs can become the wrong kit the next.