Oracle tumbles after report that it’s lost nearly $100 million from renting out access to Nvidia’s Blackwell chips

You buy Nvidia’s flagship chips because they’re supposed to be best in class, empowering you to build better AI capabilities or make lots of money off other companies that want to harness the power of the AI boom.

Not quite, per this report from The Information, whose final paragraph begins with this line:

“In the three months that ended in August, Oracle lost nearly $100 million from rentals of Nvidia’s Blackwell chips, which arrived this year.”

The report notes that some of this is a timing issue, a gap between getting data centers equipped for use and when customers start paying for services.

Oracle, which was roughly flat, quickly fell more than 5% as traders digested this report. Shares of Nvidia, which were up nearly 2% at their highs of the day, turned negative.

Citing internal documents, The Information says that Oracle’s “fast-growing cloud business has had razor-thin gross profit margins in the past year or so,” booking a gross profit of $125 million on rentals of servers that utilize Nvidia chips for the three months ending in August, for a gross margin of just under 14%.

The damage in markets is far from localized in those two stocks, however. In a reversal of how OpenAI’s deal with AMD buoyed the AI trade on Monday, this news is sparking a broad-based retreat.

Nvidia’s top AI chip rival, Broadcom, went from flat to down 2%, with memory chip specialist Micron and foundry giant TSMC also well in the red. Neocloud companies Nebius and CoreWeave, disk drive sellers Western Digital and Seagate Technology Holdings, and zero-revenue nuclear energy firm Okloare among the other stocks selling off on the news.