Microsoft to drop rented computing capacity from Oracle

Microsoft has decided not to renew an arrangement to rent AI computing capacity from Oracle, and Oracle shares fell 4% on Friday. The deal began in 2023 to support an AI-enabled version of Bing during a computing shortage and served as a temporary fix while Microsoft built its own data centers, after which it planned to move the work to its Azure cloud. The rented capacity used older Nvidia chips and no longer met Microsoft’s needs; Oracle said demand for its AI services remains strong, including for older GPUs. The news came as tech stocks were already falling, with the Nasdaq Composite down 5.5% on Thursday.