Hello there,
I was taking a look over your account this afternoon and noticed that you haven't yet upgraded your MarketBeat subscription to MarketBeat All Access.
During the month of November, you can get a completely free 30-day subscription to MarketBeat All Access. If you choose to continue your subscription after your free 30-day subscription, you'll receive a $200.00 account credit toward your 2024-2025 MarketBeat subscription. That means you'll pay just $19.99 per month or $199 per year (normally $399). We rarely make offers this good, so I wanted to make sure you didn't miss out on this special deal.
Our CEO Matthew Paulson is also going to send a special gift to you, a free PDF and audiobook copy of his dividend investing book, Automatic Income, if you upgrade your account today.
Claim Your Free 30-Day Subscription Here
Rebecca McKeever
MarketBeat
Oracle's AI Profits Look Slim—Are NBIS and CRWV at Risk Too?
Written by Leo Miller. Published 10/17/2025.
Key Points
- A recent report suggests that Oracle is generating slim margins on its AI cloud business and losing money on NVIDIA's latest chips.
- How concerned should investors be about Oracle and "neo-cloud" stocks?
- Investors are rewarding growth big-time, but margins will be an important risk to watch for these names going forward.
So-called "neo-cloud" stocks have been among the standout performers of 2025. The term generally describes companies providing AI-specific cloud infrastructure, particularly emerging firms like Nebius (NASDAQ: NBIS) and CoreWeave (NASDAQ: CRWV). As of the Oct. 14 close, their shares were up roughly 362% and 235%, respectively.
Up about 81%, Oracle (NYSE: ORCL) doesn't neatly fit the neo-cloud label; it is one of the world's largest legacy technology companies. Still, Oracle's 2025 pivot toward providing AI infrastructure has been a primary driver of its stock, making it central to the neo-cloud and broader AI cloud computing conversation.
Elon and Apple just made waves for the US #1 software company (Ad)
Apple just secretly added Starlink satellite support to iPhones through iOS 18.3.
One of the biggest potential winners? Mode Mobile.
One recent report is especially relevant. As first reported by The Information, Oracle is struggling to turn much profit from renting AI servers. Generating massive growth is important, but companies must convert revenue into profits to create lasting value. Below we break down what the report means for investors: does it signal trouble for neo-cloud players, or can these firms outgrow current profitability challenges and justify their large share-price gains?
Oracle's AI Server Revenues Look Thin, But Pathways for Improvement Exist
According to the report, in the three months ending in August Oracle recorded $900 million in sales from renting AI servers, but generated only $125 million in gross profit — a gross margin of about 14%. That contrasts sharply with the roughly 72% overall gross margin the company reported in fiscal 2025. Supporting evidence: Oracle's overall gross margin fell nearly 340 basis points in fiscal Q1 2026. The report also claims Oracle lost $100 million last quarter renting NVIDIA's (NASDAQ: NVDA) latest Blackwell chips.
The findings suggest that rapid expansion of Oracle's cloud business could dilute its overall margin profile. Given the size of the AI-computing opportunity, however, that is not necessarily fatal. Oracle is forecasting its cloud business to grow to $144 billion by fiscal 2030; in FY 2025 the firm reported $57.4 billion in total revenue. With a much larger revenue base, overall profits could still rise substantially even if cloud margins remain lower than legacy segments.
Margins can also improve as Oracle's cloud business scales. Higher utilization spreads fixed costs over a bigger revenue base, which should help mitigate margin dilution. Additionally, recent AI deals involving Advanced Micro Devices (NASDAQ: AMD), OpenAI and Oracle position AMD as a more meaningful competitor to NVIDIA. That could create pricing pressure on NVIDIA and help Oracle lower server costs, further supporting margins. Still, the report gives reason to believe Oracle's margins could deteriorate faster than many expect — making margin erosion a key risk to monitor.
NBIS & CRWV: Rapid Growth, But Deep Losses
For true neo-cloud names like Nebius and CoreWeave, investors have largely prioritized growth over near-term profitability.
Last quarter, these firms grew revenues by about 625% and 207%, respectively.
Nebius reported $105 million in revenue but posted an $111 million operating loss.
CoreWeave reported $1.2 billion in revenue but a net loss of $290 million and negative free cash flow of $2.7 billion.
Much of Nebius's midpoint $1 billion annualized run-rate revenue guidance has yet to come online, while CoreWeave sits on roughly a $30 billion backlog. Both companies have continued to sign multi‑billion‑dollar deals with hyperscale customers since their last reports. That gives them a runway to demonstrate improving profitability as they scale infrastructure and revenues.
ORCL and Neo-Cloud Rallies Could Continue
Profitability will likely become a greater concern for Oracle and neo-cloud stocks over time. For now, however, markets have rewarded these names for growth and placed relatively little penalty on losses or slim margins.
Notably, Oracle shares fell only about 2.5% on Oct. 7 when The Information published its report, then recovered those losses and moved modestly higher — suggesting investors are focusing on Oracle's longer-term AI strategy.
Given the backdrop, shares of these companies could run higher before market attention shifts decisively to profits. That said, investors should remain aware that margin pressure and slower-than-expected profitability improvements represent meaningful risks.
We empower investors to make better financial decisions by providing up-to-the-minute financial information and unbiased investment research.
If you need assistance with your subscription, please feel free to email MarketBeat's U.S. based support team at contact@marketbeat.com.
If you would like to unsubscribe or change which emails you receive, you can manage your mailing preferences or unsubscribe from these emails.
© 2006-2025 MarketBeat Media, LLC. All rights reserved.
345 N Reid Pl. #620, Sioux Falls, S.D. 57103. U.S.A..
0 Response to "Need your answer by midnight"
Post a Comment