Oracle Shares Plunge on Reports of Poor AI Cloud Margins, Nvidia Impact Weighed Downward

Oracle公司股价暴跌，原因是据报道其AI云业务的利润率较低，受到英伟达业务拖累，据称，Oracle的AI云业务利润空间有限，这引发了投资者对其未来盈利能力的担忧，具体情况有待进一步观察和分析。

TMTPOST -- Oracle Corporation shares tumbled as much as 7.1% on Tuesday after a report raised new concerns over profitability of artificial intelligence (AI) computing, the software giant’s highly anticipated business driving its stock surged more than 70% to the date this year.

Credit：Alibaba Cloud

For the first quarter of the fiscal year 2026 ended August 31 (Q1), Oracle’s rentals of servers generated around $900 million and booked gross profit of $125 million, equal to profit of $0.14 for every 1% of sales, The Information reported on Tuesday, citing internal documents. That represented a gross margin of 14%, significantly lower than Oracle’s overall margin of around 70% and also lower than many on Wall Street have been anticipating.

While sales from Oracle’s rental of servers powered by Nvidia Corporation AI chips nearly tripled over the past year, it just recorded an average gross margin of about 16% in the same period , ranging from less than 10% to slightly more than 20%, according to the reported documents.

All cloud firms share the financial challenge-- the mounting cost of acquiring Nvidia graphics processing units (GPUs). Oracle and other cloud providers were said to have offered big discounts on GPU rental prices to win mega-deals with AI customers. The report highlighted other special margin challenges to Oracle, including renting out the most adanced Nvidia chips.

The documents showed Oracle, in some cases, was losing “considerable” on its rentals of smaller quantities of Nvidia chips, including both new and old GPUs. The old GPUs were found to be helpful for Oracle’s margins, though new chips strain them. As a sign of the trend, the report pointed out Oracle lost nearly $100 million from renting out Nvidia’s Blackwell chips for Q1, which started deliveries this year.

One of the risks that Oracle would suffer outsize AI margin squeeze is because it doesn’t own the datacenters its customer use, unlike Amazon’s AWS and Google Cloud, which own the majority of theirs.

“Aside from whether Oracle can build enough data centers to generate the revenue it has promised investors, another challenge is how reliant its GPU cloud business could become on a single customer,” the report noted. Oracle’s top five AI cloud customers, including TikTok’s Chinese parent ByteDance, Meta, OpenAI, xAI and Nvidia, accounted for 80% of the company’s business.

Oracle on September 9 released the top and bottom line miss for Q1. Revenue grew 12% year-over-year (YoY) to $14.93 billion, versus the Wall Street estimated $15.03 billion polled by LSEG. Earnings per share (EPS) of $1.47 fell short of expected $1.48. The Q1 gross margin stood at 67.3%, the lowest in more than a year. However, Remaining Performance Obligations (RPO), a measure of contracted revenue that has not yet been recognized, soared 359% YoY to $455 billion.

Oracle CEO Safra Catz attributed the RPO standout to massive cloud contracts. “We signed four multi-billion-dollar contracts with three different customers in Q1,” said Catz in a statement. the chief executive expressed upbeat on the cloud business, stating: “It was an astonishing quarter—and demand for Oracle Cloud Infrastructure continues to build. Over the next few months, we expect to sign-up several additional multi-billion-dollar customers and RPO is likely to exceed half-a-trillion dollars.”

Catz revealed Oracle anticipated revenue from its cloud infrastructure to grow 77% to $18 billion this fiscal year, and then increase to $32 billion, $73 billion, $114 billion, and $144 billion over the following four fiscal years. “Most of the revenue in this 5-year forecast is already booked in our reported RPO. Oracle is off to a brilliant start to FY26,” she said.

Oracle was reported to clinch another massive cloud computing deal a day after the company projected gobsmacking growth guidance for its cloud business.

OpenAI has signed a deal to purchase $300 billion worth of computing power from Oracle over roughly five years, marking one of the biggest cloud contracts ever signed, the Wall Street Journal reported on September 10. The contract, starting in 2027, requires 4.5 gigawatts (GW) of power capacity, roughly comparable to the electricity amount consumed by about four million homes, per the report.