Oracle stock slipped 5% on Tuesday after a report from The Information that raised questions about the company’s plans to buy billions of Nvidia chips to rent as a cloud provider to clients like OpenAI.
Oracle had 14% gross margins on $900 million in sales in its Nvidia cloud business in the three months ending in August, according to the report, which cited internal documents. That’s significantly lower than Oracle’s overall gross margin of around 70%.
The report said that Oracle’s recent transformation into one of the most important cloud and artificial intelligence companies may run into profitability challenges because of how expensive Nvidia chips are and aggressive pricing on its AI chip rentals.
In September, Oracle said that its backlog of cloud contracts, which it called remaining performance obligations, had jumped 359% in a year. It forecasted $144 billion in cloud infrastructure revenue in 2030, up from just over $10 billion in 2025.
Much of that forecasted revenue is from Oracle’s role in the Stargate project, in which the enterprise vendor is working with OpenAI to open five massive data centers filled with AI chips from Nvidia.
Year-to-date stock chart for Oracle.
