Catenaa, Tuesday, October 07, 2025- Oracle shares fell on Tuesday after a report that the software maker’s profit margin in its cloud computing business is lower than market estimates.
While Oracle generated roughly $900 million in revenue from the rental of servers powered by Nvidia chips during the three months ended in August, the company only managed about $125 million in gross profit, the Information reported.
Oracle shares fell as much as 7.1% on Tuesday, and were down by 4% by 1 pm ET.
In some cases, Oracle was losing “considerable” amounts of money on its rentals of smaller quantities of Nvidia chips, including both new and old graphics processing units, according to the report.
Oracle shares have jumped more than 68% this year as soaring demand for artificial intelligence computing has boosted the company’s revenue growth.
Last month, Oracle projected revenue in its cloud-computing business would jump 700% in the next three fiscal years, sending the stock up 36% on September 10.
The heavy spending required to acquire chips and build out data center capacity has weighed on Oracle’s overall gross margin, which excludes operating expenses.
In its most recent earnings report, Oracle’s gross margin was 67.3%, the lowest in more than a year, according to data compiled by Bloomberg.
Bloomberg reported previously that Oracle signed a deal with ChatGPT operator OpenAI to supply 4.5 gigawatts’ worth of data center capacity, enough energy to power millions of American homes.
The company is also part of a consortium of buyers that is nearing an agreement to buy the US operations of social media platform TikTok.
