markets

Luke Kawa10/7/25

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.

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Hardware stocks jump thanks to server demand and record Lenovo revenue

Server stocks are rallying as Dell, Super Micro Computer, and Hewlett Packard Enterprise ride the momentum of Hong Kong-based Lenovo. The PC maker’s stock rose 19% on Friday, hitting an all-time high, on record Q4 earnings.

Powering the positive earnings report was the company’s AI-related revenue, which grew 84% in the fourth quarter and now makes up over a third of total revenue. Investors seem to think the increased demand for servers could have trickle-down effects for other companies.

“The company’s results and commentary reinforced the outlook for strong AI-infrastructure demand while indicating resilient broader traditional server and storage spending,” wrote Woo Jin Ho, a senior technology analyst at Bloomberg Intelligence. “Lenovo’s $21 billion AI-server pipeline and remarks that demand is outpacing supply support Dell’s AI-demand momentum and point to robust orders.”

AI’s insatiable computing demand is reshaping the hardware industry and driving up server demand.

Dell will report first-quarter earnings on Thursday, May 28.

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Ross Stores surges as Q1 results beat expectations, full-year guidance raised

Ross shares are rising after the company delivered strong Q1 results, with sales topping Wall Street’s projections.

The stock soared 6.3% just after the open.

Key numbers:

Earnings per share of $2.02 vs. $1.47 year over year (estimate: $1.72).
Sales of $6.01 billion, up 21% year over year (estimate: $5.61 billion).
Comparable sales growth of 17% (estimate: 8.58%).

CEO Jim Conroy attributed the results to better traffic in stores. “Customer traffic was the primary driver of the strong sales trend as compelling merchandise assortments, higher customer acquisition and engagement from our ongoing marketing initiatives, and an improved in‑store experience are resonating with shoppers.”

The company also noted that transaction volume grew across all key demographics, including “income levels, ethnicities, and age groups, including younger customers.” Sales were also likely buoyed by standard seasonal tailwinds, including consumer spending from tax refunds.

Backed by the strong quarter, the company lifted its full-year targets. Ross now projects same-store sales growth of 6% to 7%, up from the prior forecast of 3% to 4%, topping Wall Street’s estimate of 4.64%. It boosted its annual EPS guidance to a range of $7.50 to $7.74, versus the prior outlook of $7.02 to $7.36.

Ross Stores has been one of the retail sector’s standout performers this year, rising around 20% year to date as of Thursday’s close.

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