Microsoft stopped renewing AI capacity it rented from Oracle because the chips no longer met its specifications. Oracle says the same generation of GPU renews at a premium. Both companies are describing real demand, in two separate markets.
- Microsoft declined to renew a 2023 Oracle contract and has been switching that capacity off for months, according to Bloomberg.
- Oracle said capacity that came up for renewal in its first quarter was renewed or resold 20 percent above prior contract prices.
- Most of those GPUs were four years old or older, and Oracle reported 97.9 percent GPU utilization for the quarter.
- Microsoft has more than 80 billion dollars committed to renting capacity from outside providers and is now reviewing those contracts.
- The split matters because rented silicon is financed on an assumed earning life, and the tenant decides when that life ends.
Read the full analysis, the same cards, two price curves.
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