The Stock Market Is “Petrified of Oracle’s Balance Sheet” as Microsoft Walks Away

Key Takeaways

• Microsoft is winding down a deal to rent AI computing power from Oracle, days after Oracle canceled an estimated $7 billion chip-leasing deal with Tencent.
• The Microsoft contract itself looks small, but losing it leaves Oracle’s backlog leaning even harder on OpenAI, which S&P says accounts for about half of it.
• Oracle’s free cash flow was negative $23.7 billion in fiscal 2026, its total debt reached $167 billion, and it sold another $20 billion of stock and notes on Nov. 2.
• The market’s fear looks justified until Oracle’s mid-December results show its backlog growing with customers other than OpenAI.

Microsoft (MSFT) has stopped renewing a deal to rent AI computing power from Oracle (ORCL) and is winding it down, Bloomberg reported on Friday. It’s part of a wider review of billions of dollars in cloud partnerships.

That makes two AI deals Oracle has lost in a week. On Wednesday, Oracle canceled an estimated $7 billion chip-leasing deal…