Cloud operator Oracle reported a $100 million loss from renting out its Nvidia Blackwell chips in its most recent quarter, according to a report from The Information. Oracle stock is falling on this headline.
After a new report from The Information that really highlights the financial challenges of renting out Nvidia chips. Now, the previously undisclosed data on Oracle's AI cloud business points to an industry-wide challenge. The big takeaway from the report, Oracle lost nearly $100 million from rentals of Blackwell chips in the most recent quarter. The company's banking on bigger revenue to offset profit margin.
Oracle generated around $900 million from rentals of servers powered by Nvidia chips. And recorded gross profit of $125 million. So that's equal to 14 cents for every dollar of sales.
It's lower than the gross margins of many non-tech retail businesses. A spokesperson for Oracle, which doesn't publicly disclose the AI cloud server unit's financials, did not have a comment on those figures for The Information.
The internal documents offer a rare glimpse into Oracle's dramatic transformation from a weak link of the cloud industry to an AI data center powerhouse. It also shows that being in the business of buying and renting out Nvidia's graphics processing units is not easy. So those Oracle shares, obviously they've had a big up year, but right now they are trading down by about 5%. I'm also prompted to check on stocks like CoreWeave, which is in a similar business and also is seeing a leg lower.