Oracle Shares Decline Following Report on Slim Cloud Margins Linked to Nvidia Chips

Oracle's stock experienced a reduction of 5% on Tuesday, spurred by concerns over its ambitious purchase of Nvidia chips for cloud services designed for clients like OpenAI.

The tech giant reported a 14% gross margin from $900 million in Nvidia cloud services sales for the quarter ending in August. This figure pales compared to its traditional gross margin of roughly 70%.

The report highlighted potential challenges Oracle faces as it evolves into a leading player in cloud computing and artificial intelligence sectors, mainly due to high costs of Nvidia's chips alongside competitive pricing for AI chip rentals.

Oracle announced in September that its cloud contract backlog, referred to as remaining performance obligations, is on the rise. It has projected $144 billion in cloud infrastructure revenue by 2030, significantly up from over $10 billion anticipated in 2025.

A substantial portion of this future revenue expectation hinges on Oracle’s collaboration with OpenAI, which heavily relies on AI hardware supplied by Nvidia.