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ORCLOracle Corporation$125.35
24h
-1.38%
9 Nov, 00:38
Oracle stock drop explained by non-renewal news, offset by high sublease rates
Neutral+7.97%
AI Summary
The author explains ORCL's 5% intraday drop triggered by reports of Microsoft not renewing compute leases, but highlights that Oracle successfully subleased the hardware at prices 20% higher than the original contract, suggesting the market reaction may be overblown.
ORCL dropped sharply by 5% during Friday's trading session, following Bloomberg reports that Microsoft would not renew its compute leases with Oracle.
This contract was signed in 2023, when Microsoft leased a large number of A100 and H100 GPUs. Three years later, Microsoft's own needs had changed significantly, so it is normal for them to choose not to renew upon expiration. According to official statements from ORCL, all the cards not renewed by Microsoft have been subleased, at prices 20% higher than those agreed upon in the original contract three years ago.