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Oracle is unafraid when it comes to hedging big bets.
The company is making a career out of reinventing itself on a large scale, often by spending a lot of money before competitors even know what’s coming. Now, the market is paying close attention to its latest reinvention: a big push into artificial intelligence using Nvidia’s cutting-edge chips.
Oracle’s partnership with Nvidia sounds like a dream come true for Silicon Valley and Wall Street. Oracle gets the power to rent AI computing to clients like OpenAI, and Nvidia expands its reach into yet another part of the enterprise cloud.
All involved parties are working together to build the infrastructure for what Oracle Chief Technology Officer Larry Ellison calls “the most transformative technology of our time.”
We’re not just buying chips — we’re building the world’s next supercomputer network, Ellison told investors in September. This is a generational shift, and Oracle intends to lead it.
But behind the big promises and billion-dollar commitments is a quieter story that isn’t about hype or hardware, but about math.
As Oracle gets more serious about its AI goals, people are starting to wonder how much this future will really cost, and if even the fastest-growing cloud business can avoid the laws of financial gravity.
It was never going to be cheap for Oracle to get into artificial intelligence. Over the past year, the company has spent billions of dollars building GPU superclusters with Nvidia hardware.
These same chips are powering the generative AI boom at companies like OpenAI and Anthropic. That spending spree makes Oracle one of the most important companies in the race for AI infrastructure.
But the race is just as expensive as it is quick. This week, a recently released report said Oracle’s AI cloud margins may be much thinner than investors thought, despite all the talk of hypergrowth.
According to internal numbers in that report, Nvidia made about $900 million last quarter, but only a small part of that went to the bottom line.
Related: Major analyst drops 5-word take on market pullback
In Oracle’s overall financials, that’s a rounding error. In reality, it shows how much it costs to build an AI empire.
Even a tech veteran like Oracle is finding that scale alone doesn’t guarantee profitability. This is due to the high power needs of data centers, the lack of chips, and the pressure from customers to lower prices.
Oracle’s message for now is to be patient: Growth comes first, then profits. In a market accustomed to quick rewards, though, patience can be the hardest thing to sell.
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