Act shares of Oracle are lower today on a report that says the cloud provider is struggling to make money renting out Nvidia chips.

That story from the information.

Sima Modi has the details in today's tech check.

Seema, what can you tell us about this report that is driving a lot of the downside today?

Yeah, the stock is down right now after that big run-up we saw last month, Dom.

If you read the report, it basically alleges that while Oracle's cloud business is growing exponentially,

it has, quote, razor-thin gross profit margins and lower than what Wall Street had initially anticipated,

due in part to the rising cost of power and labor to run data centers.

Here's what we know right now. Oracle, as we know, is quickly becoming a key

enabler in the buildout of artificial intelligence data centers, renting out Nvidia chips to big

partners like OpenAI. That was made clear when it reported earnings last month and revealed this

huge black log, a backlog of cloud contracts, also known as remaining performance obligations,

which jumped 359% in a year.

But even then, at that time, analysts including Brad Sills at Bank of America, cautioned that

visibility around longer-term profitability is still not clear.

He at that time, though, did reiterate that this is a company that has a good track record.

It has a history of being a leading software platform,

and that should translate to building value for AI workloads. One of the questions that has emerged

is around margins, how much margins will be impacted in the short term as they put more money into

CAPEX. Is it six months? Is it 12 months? That's what the market seems to be trying to suss out right

now with a stock down nearly 6%. And is there a better deal, economics that they can get from

Nvidia, if they continue to buy so many of these high-performing AI chips? We are less than a week

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