Oracle Corporation experienced a 5% decline in its stock price on September 23, 2025, following insights from The Information. This report raised concerns regarding Oracle’s plan to acquire Nvidia chips for its cloud services, particularly for significant clients like OpenAI.
Oracle’s Financial Performance
During the quarter ending in August, Oracle reported gross margins of 14% on $900 million in sales from its Nvidia cloud business. This figure starkly contrasts with the company’s overall gross margin, which hovers around 70%.
Challenges Ahead for Oracle
The increase in Nvidia chip costs and competitive pricing on AI chip rentals may pose profitability challenges for Oracle. This situation comes at a time when Oracle is positioning itself as a key player in cloud computing and artificial intelligence.
Growth Projections
Despite the recent dip in stock value, Oracle showed promising growth in its cloud contracts. The company reported a 359% increase in its backlog of cloud contracts, referred to as remaining performance obligations, within a year.
Looking ahead, Oracle anticipates its cloud infrastructure revenue could reach $144 billion by 2030, a substantial rise from just over $10 billion projected for 2025. A significant portion of this revenue is expected to stem from the Stargate project.
Stargate Project Overview
Stargate is a strategic partnership involving OpenAI, Oracle, and SoftBank, aimed at establishing data centers and supporting infrastructure for artificial intelligence across the United States. Oracle’s involvement includes the construction of five large data centers equipped with Nvidia chips.
- Location: Abilene, Texas, US
- Key Partners: OpenAI, SoftBank
- Projected Cloud Revenue in 2030: $144 billion
- Sales in Nvidia Cloud Business: $900 million
- Current Gross Margin: 14%
- Overall Gross Margin: ~70%
Oracle’s future in the competitive landscape of cloud services and artificial intelligence will depend on its strategic choices regarding Nvidia chips and pricing strategies.
