Oracle Corporation is facing significant financial challenges despite a previous surge in stock value following the announcement of substantial growth forecasts. In a statement last month, Oracle CEO Safra Catz reported that the company signed four multi-billion-dollar contracts with three different customers in the first quarter, contributing to a contract backlog of $455 billion.
However, internal documents obtained by The Information reveal a starkly different financial reality. Oracle"s AI cloud margins are reportedly very low, with profits averaging only 14 cents for every dollar spent on Nvidia server rentals. These margins fluctuate between 10% and 20%, averaging just 16%, which is lower than many retail businesses. In some instances, the company is reportedly losing money on these operations.
Furthermore, Oracle incurred a loss of nearly $100 million in the last quarter from renting Blackwell chips, a key component driving its AI initiatives. This financial strain raises questions about the sustainability of Oracle"s recent growth claims.
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