⚠ Renting Out Chips Bought From NvidiaModerate threat

Oracle (ORCL) — threat to the moat

Oracle rents out Nvidia chips it buys at Nvidia's prices, so the scarcity profit in AI mostly belongs to the chip maker.

Oracle's AI cloud runs on chips it buys from others. Its chairman said in December 2025 that Oracle would "continue to buy the latest GPUs from NVIDIA" while working with other suppliers1. Nvidia is also one of the companies whose new commitments raised Oracle's remaining performance obligations in that quarter2.

Who pays for the chipsOracle buys GPUsstandard contractsCustomer prepays equipmentpart of large AI contractsCustomer supplies GPUspart of large AI contractsPrepaid or customer supplied, June 2026$75bnReported GPU rental margin, Aug 2025 quarter14%Oracle Q2 and Q4 FY2026 results releases; CNBC, 16 October 2025
The customer paying is Oracle's hedge.

A company that buys its main input keeps only what is left after the supplier is paid. When demand for chips is higher than supply, the chip maker, not the renter, earns the scarcity profit. The reported 14% gross margin on renting out Nvidia chips in the August 2025 quarter3 is one sign of where the profit sits.

Some large contracts shift this cost. In several of them the customer prepays for the equipment or buys the GPUs itself and supplies them to Oracle; those portions totalled $75 billion by June 20264.

The Competitors page looks at Nvidia as supplier and customer. For the moat the test is the share of new contracts where the customer supplies or prepays the chips; if it rises, Oracle's exposure to Nvidia's pricing falls, and if it stops rising, Oracle is renting out margin that belongs to someone else.

References
  1. ReportedIts chairman said in December 2025 that Oracle would "continue to buy the latest GPUs from NVIDIA" while working with other suppliers.
    Oracle second-quarter fiscal 2026 results release, Form 8-K exhibit 99.1 - multicloud datacenters, regions, chip neutrality and new commitments from Meta and NVIDIA. — Q2 FY2026 · publ. 10 December 2025 · source ↗
  2. ReportedNvidia is also one of the companies whose new commitments raised Oracle's remaining performance obligations in that quarter.
    Oracle second-quarter fiscal 2026 results release, Form 8-K exhibit 99.1 - multicloud datacenters, regions, chip neutrality and new commitments from Meta and NVIDIA. — Q2 FY2026 · publ. 10 December 2025 · source ↗
  3. ReportedThe reported 14% gross margin on renting out Nvidia chips in the August 2025 quarter is one sign of where the profit sits.
    CNBC, Oracle confirms Meta cloud deal; fiscal 2030 targets of $225 billion revenue and $21 EPS; AI infrastructure margins and AI database targets. — October 2025 · publ. 16 October 2025 · source ↗
  4. ReportedIn several of them the customer prepays for the equipment or buys the GPUs itself and supplies them to Oracle; those portions totalled $75 billion by June 2026.
    Oracle fourth-quarter and fiscal 2026 results release, Form 8-K exhibit 99.1 - financing, $75 billion of prepaid and customer-supplied hardware, Oracle Health and multicloud. — FY2026 · publ. 10 June 2026 · source ↗
Sources
Generated September 25, 2026