W.036Microsoft is letting a 2023 Oracle rental lapse. Oracle’s $664B backlog is 22 years of its cloud infrastructure sales at today’s pace
Microsoft declined to renew a 2023 deal to rent AI capacity from Oracle and has been switching it off, Bloomberg reported on November 6; neither company has given its value. It is the fifth Microsoft pullback from rented or leased capacity reported since June. Oracle’s contracted backlog was $664B at August 31, 22 times its latest quarter’s $7.4B of cloud infrastructure revenue annualized. Its shares fell during the day but closed up 0.8% at $116.10, 53% below their June 1 close.
One contract, a long list
The Oracle rental is being run off, not cancelled. Microsoft declined to renew a contract signed in 2023 to rent Oracle cloud capacity for Bing’s AI search and has been turning that capacity off in recent months, Bloomberg reported, citing people familiar with the matter. The servers use older Nvidia chips that no longer meet Microsoft’s needs, according to the report, which describes the move as part of a broader review of its cloud partnerships. Bloomberg could not determine the deal’s full value, and Oracle has never disclosed it. Microsoft declined to comment. Oracle said demand for its AI infrastructure remains strong, “including for earlier-generation GPUs.”
It is the fifth such report since June, by our count. Business Insider reported on June 16 that talks for Microsoft to rent more than $3B of additional Oracle capacity had collapsed; Oracle called the details inaccurate. In October Microsoft pulled out of an Nscale deal tied to a UK site, which Bloomberg on November 5 put at about $3B and attributed to grid power that was years away. Bloomberg also reported that day that Microsoft had dropped a 1.35 GW letter of intent in West Virginia, and the Financial Times reported that it had declined an option to more than double its Nscale contract in Texas, which W.019 covered. Bloomberg puts Microsoft’s commitments to rent capacity from cloud companies at more than $80B. The contracts with a disclosed value, with Nscale, Nebius and IREN, come to about $71B; Nscale’s figure, from its IPO filing in September, predates the UK cancellation.
Where values are known, the pullbacks are small next to the contracts
Microsoft’s contracts with neocloud providers that have a disclosed or reported value, $ billions (Nebius’s outline runs to the “up to” value), and the two reported pullbacks that came with a value. The Nscale Texas option (put only at “tens of billions” by the FT), the 2023 Oracle rental and the West Virginia letter of intent have no specific reported value and are not drawn. Nscale’s value is the most its Microsoft work orders could pay, from its S-1, and predates the UK withdrawal. Lambda’s contract is described only as multi-billion and CoreWeave’s value is undisclosed.
The five reported pullbacks
| When | What | Value | Reported by |
|---|---|---|---|
| Jun 16 | Talks to rent more than $3B of Oracle capacity collapsed | more than $3B | Business Insider; Oracle called the details inaccurate |
| October | Pulled out of an Nscale deal tied to a UK site | about $3B (Bloomberg) | The Telegraph, Oct 18; value from Bloomberg, Nov 5 |
| Months before Nscale’s September IPO filing; reported Nov 5 | Declined an option to more than double the Nscale Texas contract, about 500 MW (first described as 700 MW) | tens of billions (FT) | Financial Times, Nov 5; Reuters |
| Reported Nov 5 | Dropped a 1.35 GW letter of intent in West Virginia | not reported | Bloomberg, Nov 5 |
| Reported Nov 6 | Winding down the 2023 Oracle rental for Bing’s AI search; declined to renew | not determined | Bloomberg, Nov 6 |
Microsoft is still signing, and still spending
The pullbacks sit beside a lease book that keeps growing. Microsoft’s leases signed but not yet started, mostly data centers, rose to $364.6B at September 30 from $329.1B in June, $35.5B in a quarter, as W.007 set out. Capital spending including finance leases was $45.2B in the September quarter. On the October 28 call, chief financial officer Amy Hood said some third-party capacity deliveries expected in the quarter were delayed, guided to more than $50B in the December quarter, and put spending for the calendar year at about $170B, down from about $175B, because of those delays.
What Oracle has booked
Oracle’s backlog is large against what it bills today. Remaining performance obligations, contracted revenue not yet recognized, were $664B at August 31, up $26B in the quarter and $209B in a year. Revenue from Oracle Cloud Infrastructure was $7.4B in the same quarter, up 121%; four times that is about $29.6B, so the backlog is about 22 years of it. The backlog covers all of Oracle’s contracts, not only cloud infrastructure, and Oracle does not say how much of it any one customer accounts for. To serve it Oracle guided to $90B to $95B of capital spending this fiscal year, against $55.7B last year; in the first quarter capex of $28.5B exceeded operating cash flow of $23.1B.
The stock recovered on the day. Oracle fell during the session to as low as $109.21, then closed at $116.10, up 0.8%, according to 24/7 Wall St. That is 53% below its June 1 close of $248.15.
Oracle added $209B of backlog in a year
Oracle remaining performance obligations at fiscal quarter ends, $ billions (fiscal years end May 31), from its quarterly releases.
The backlog is 22 times cloud infrastructure revenue, annualized
Oracle, $ billions: contracted backlog at August 31, 2026; capital spending guidance for fiscal 2027 (outline to the top of the range) and actual for fiscal 2026; and first-quarter cloud infrastructure revenue times four (our calculation). The backlog includes all of Oracle’s contracts, not only cloud infrastructure.
What this changes on 06.ai
- Leveraged middle pack: unlike the Nscale cases (a site without grid power and an expansion option), the Oracle rental is a running contract Microsoft chose not to renew because its chips had aged, and it is with a large cloud rival rather than a neocloud. Oracle’s second-quarter results, expected in December, will show whether RPO keeps rising.
- Neocloud capex funding pack: a series worth keeping is Microsoft pullbacks, dated and sized where reported, against its ~$80B of rental commitments in Bloomberg’s tally.
Sources and method
| Item | Figure | Source |
|---|---|---|
| Nov 6 report | Microsoft is winding down a 2023 deal to rent AI cloud capacity from Oracle; declined to renew and has been turning the capacity off in recent months; the servers use older Nvidia chips; Bloomberg could not determine the deal’s full value; Microsoft declined to comment; Microsoft has committed more than $80B to rent capacity from cloud companies | Reuters, relaying Bloomberg, Nov 6 |
| Nov 6 report | Same, with Oracle’s statement that demand for its AI infrastructure remains strong, including for earlier-generation GPUs | The Next Web, Nov 6 |
| Oracle shares | Closed at $116.10, up 0.8%; intraday low $109.21 | 24/7 Wall St., Nov 6 |
| Oracle shares | Closed at $248.15 on June 1, 2026, up 9.9% that day | Rallies.ai, Jun 1 |
| Oracle Q1 FY27 | RPO $664B; cloud infrastructure revenue $7.4B, up 121%; capex $28.499B; operating cash flow $23.103B; FY27 capex guidance $90–95B | Oracle Q1 FY27 release (8-K) and call |
| Oracle RPO | Earlier quarter ends: Aug 2025 $455.3B; Nov 2025 $523.3B; Feb 2026 $553B; May 2026 $638B | Oracle quarterly releases, compiled in W.002 |
| Microsoft | Leases not yet commenced $364.6B at Sep 30 ($329.1B at Jun 30); capex including finance leases $45.2B in the September quarter; Q2 capex expected over $50B; calendar-year capex about $170B, citing delayed third-party capacity | Microsoft Q1 FY27 call transcript, The Motley Fool; 10-Q |
| Microsoft | 10-Q for the quarter to Sep 30, 2026 | SEC EDGAR |
| Pullbacks | Dropped a 1.35 GW West Virginia letter of intent; the Nscale UK deal it left last month was about $3B; declined the Nscale Texas expansion | Bloomberg, via Yahoo Finance, Nov 5 |
| Pullbacks | Talks to rent more than $3B of Oracle capacity collapsed over a compliance gap (Business Insider, June 16); Oracle disputed the details | DatacenterDynamics |
| Pullbacks | Microsoft declined an option to more than double its Nscale Texas contract; about 500 MW | Financial Times, via W.019 |
| Contracts | $17.4B, up to $19.4B with additional services, through 2031 | Nebius, Sep 8, 2025 |
| Contracts | Nscale’s Microsoft work orders, signed Sep 2025 to Apr 2026, provide payments of up to about $43.8B through December 2033 (S-1) | TechTarget |
| Contracts | Lambda multi-billion, undisclosed; IREN $9.7B over five years | DatacenterDynamics, on Bloomberg |
Oracle: cloud infrastructure run-rate 7.4 × 4 = 29.6; 664 ÷ 29.6 = 22.4. RPO change 664 − 638 = 26; 664 − 455.3 = 208.7. Q1 free cash flow 23.103 − 28.499 = -5.4. Shares: 116.1 ÷ 248.15 − 1 = -53.2%. Its record close, in September 2025, was higher than the June 1 close. Microsoft: 364.6 − 329.1 = 35.5. Contracts 43.8 + 17.4 + 9.7 = 70.9, using Nebius’s base value and the Nscale maximum in its S-1. The count of five is ours, from the reports in the table; Microsoft has confirmed none of them. The “more than $80B” is Bloomberg’s tally, not a Microsoft figure.
Wire reports are written within hours of the news, on a six-hour schedule. Each lists its sources and shows the arithmetic behind its figures. Not investment advice.