Microsoft is phasing out an artificial intelligence (AI) computing partnership with Oracle Corp after choosing not to renew a 2023 agreement, Bloomberg has reported, citing people familiar with the matter.
Microsoft has steadily deactivated rented server capacity in recent months, according to the report. The Oracle-hosted machines relied on older generations of Nvidia Corp. chips that no longer align with Microsoft’s current computing requirements. The shift highlights growing industry unease surrounding hardware obsolescence; research firm Gartner Inc. has warned that aggressive capital expenditures on AI infrastructure risk significant write-downs as faster, more efficient chips enter the market.
Neither company disclosed the total financial value of the contract when it was announced in 2023 to support Microsoft’s AI-powered Bing search engine, and Bloomberg was unable to determine its full scale. The companies struck a deal in 2025 for Nscale to deploy around 200,000 Nvidia AI chips under an expanded agreement with Microsoft across its data centers in Europe and the US.
A potential deal extension would have been worth tens of billions of dollars for Nscale, according to a report in The Financial Times. Microsoft will reportedly not exercise an option to more than double the size of its existing agreement with AI cloud provider Nscale to rent more computing power at a Texas data center.