Microsoft Winds Down Its Deal to Rent AI Cloud Capacity From Oracle, Bloomberg Reports

Microsoft is winding down an arrangement to rent AI computing capacity from Oracle and has been switching that capacity off in recent months after declining to renew the contract, Bloomberg reported on November 6, 2026, citing people familiar with the matter. The rented servers ran older Nvidia chips that no longer matched what Microsoft needed, the people said (via The Next Web).

The report lands as Microsoft reviews the billions it has committed to rented AI infrastructure from other companies, alongside the data centers it builds itself. The Information also reported that Microsoft has ended the deal. Microsoft declined to comment, and Oracle said demand for its AI infrastructure remains strong, including for older chips, according to The Next Web.

What did Microsoft rent from Oracle?

Microsoft rented Oracle servers to run AI for its Bing search engine under a deal announced in 2023, according to The Next Web, and Bloomberg could not determine the deal's full size. Oracle described it on November 7, 2023 as a multi-year agreement.

In Oracle's 2023 announcement, Microsoft was using Oracle Cloud Infrastructure (OCI) alongside its own Azure hardware for inference, the work of running trained AI models to answer requests, behind Bing's conversational search. Microsoft managed the Oracle servers from Azure over Oracle Interconnect for Microsoft Azure, a private link between the two clouds. The release said OCI's GPU clusters could scale to 32,768 Nvidia A100 or 16,384 Nvidia H100 chips, without saying which Microsoft used. Both are now older generations: Oracle made Nvidia's Vera Rubin systems generally available on OCI on October 27, 2026.

Why is Microsoft pulling back from rented capacity?

Microsoft's leaders have grown frustrated with the cost of and delays in the outside capacity they rent, Bloomberg said, according to The Next Web. Microsoft has committed more than $80 billion to rent capacity from cloud firms such as CoreWeave, Nscale and Nebius, and the Oracle decision is part of a broader reassessment of those partnerships.

The delays have already shown up in Microsoft's own numbers. When it reported results on October 28, 2026, Microsoft said capital spending of $45.2 billion fell short of its $50 billion projection because some third party capacity deliveries expected in the quarter arrived late, Reuters reported. The company called that a matter of timing, not a change in plans.

Nscale shows how concentrated those commitments are. Its IPO filing with the US Securities and Exchange Commission puts its Microsoft contracts at up to about $43.8 billion through December 2033, which works out to roughly half of the more than $80 billion figure, by this site's arithmetic. Microsoft reportedly turned down an option to expand an Nscale deal in Texas in the week of the Oracle report, weeks after it pulled out of an Nscale site in England (The Next Web).

Aging hardware is part of the picture. Gartner has warned that much AI infrastructure spending could face large write-downs as newer chips arrive, according to The Next Web.

How does this affect Oracle?

Oracle shares fell about 3% after the report, The Next Web said, adding to pressure on a company whose AI data center spending has pushed its free cash flow negative. Oracle's credit rating sits one notch above junk and its shares have more than halved since a June peak, according to the same report.

It is the second report in 2026 of a Microsoft and Oracle capacity deal not going ahead, after Business Insider reported in June that separate talks for Microsoft to lease more Oracle capacity had collapsed, a report Oracle disputed (via The Next Web).

Oracle's largest commitments lie elsewhere. The Next Web noted in June that Oracle spent $55.7 billion on data centers in its last fiscal year and that investors worry its commitments, anchored by a large OpenAI deal, concentrate risk in a few customers.

What we don't know yet

• How much capacity the Oracle deal covered and what it was worth, which Bloomberg could not determine.
• Which Nvidia chips the rented servers used and when the last of them will be switched off.
• Whether Microsoft will move the Bing workloads to its own data centers or to another provider.
• Which other outside capacity contracts Microsoft is reassessing, and whether any beyond Oracle and Nscale will end early or go unrenewed.