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Oracle Shares Drop as Cloud Profits Disappoint, Despite AI Growth

Oracle

Business Honor
08 October, 2025

Oracle’s profits from AI cloud services dropped, but strong demand and future plans keep investors hopeful about long-term growth.

Oracle's stock faced a major drop after a study that showed the company's cloud computing profit margins were lower than most investors expected. Oracle rented computers with Nvidia chips for about $900 million in the quarter that ended in August, but only about $125 million of that was gross profit, according to internal papers that Bloomberg cited. Suggesting that the profit margin was significantly less than expected.

According to the report, Oracle is losing money on some smaller GPU rentals with both new and older models from Nvidia. Oracle chose not to respond after the announcement; Nvidia's shares fell to 0.6%, while Oracle's stock dropped to 7.1% before recovering its losses. Oracle's stock rose by approximately 70% this year due to strong demand for AI technology, despite these margin issues. The stock rose 36% earlier this month after the company recently predicted that its cloud revenue would rise by 700% over the next three years.

Experts like Guggenheim's John DiFucci are still hopeful. According to him, Oracle is refusing deals with a gross margin of less than 25% overall, and margins may be small at first but should increase over time. Because Oracle offers better results at a cheaper price, DiFucci referred to it as the "go-to choice" for AI training. Oracle's total gross margin dropped to 67.3%, the lowest level in more than a year, due to major investments in Nvidia-based data centers. Yet, its partnerships with lending OpenAI's ChatGPT data center space and buying TikTok's US operations suggest Oracle's dedication to the AI future. By the 2030, Oracle aims to be at the center of AI innovation, supporting sectors like healthcare and autonomous technology with more intelligent cloud solutions.