Shares of Oracle Corp (NASDAQ:ORCL) are falling Tuesday after The Information reported that the company is facing financial struggles related to renting out Nvidia chips.
What To Know: The Information cited internal Oracle data indicating the company lost nearly $100 million last quarter renting out Nvidia Corp’s (NASDAQ:NVDA) Blackwell chips. The report also indicates that Oracle’s gross profit margin from rentals of servers powered by Nvidia chips averaged around 16% over the past year.
Oracle shares were down nearly 5% following the news, according to Benzinga Pro. The sharp sell-off in shares is likely due to the strong run in the stock this year.
Oracle shares are up more than 65% on a year-to-date basis, riding high on database and cloud infrastructure demand from the growing artificial intelligence industry. In its most recent earnings report, Oracle reported that total revenue was up 12% year-over-year as the company’s cloud infrastructure unit grew 55%.
“As a bit of a preview, we expect Oracle Cloud Infrastructure revenue to grow 77% to $18 billion this fiscal year — and then increase to $32 billion, $73 billion, $114 billion, and $144 billion over the subsequent four years,” said Safra Catz, executive vice chair of Oracle.
The company also recently signed four multi-billion dollar contracts with three different customers and appointed two new co-CEOs. Oracle is not due to report financial results again until December.
ORCL Price Action: Shares of Oracle were down 4.36% at $278.89 at the time of publication on Tuesday, according to Benzinga Pro.
The stock has been bouncing around, hitting a high of $293.00 and dipping to a low of $271.14 so far in Tuesday’s session. It’s been a busy day for trading, with 20.7 million shares changing hands. For some perspective, the 50-day moving average currently sits at $263.75.
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