I woke up to everyone talking about Microsoft abandoning Oracle's computing power? It was first reported by Bloomberg, but key details were missing. 1. Why didn't Microsoft renew the contract? This is a batch of computing power Oracle provided to Microsoft in 2023 (for the new version of AI-assisted Bing), using older generation Nvidia GPUs. Microsoft decided not to renew and has been gradually shutting down these resources in recent months. The reason is that this hardware no longer meets Microsoft's constantly changing technical specifications. Simply put, in 2023, that would have been Nvidia H100 level, which no longer meets Microsoft's technical needs. 2. Is this computing power just sitting idle because Microsoft didn't renew the contract? Not really. Oracle previously disclosed that all GPU capacity whose contracts expired in the last quarter have been renewed or resold at prices about 20% higher than the original contracts. Most of these GPUs were over four years old. While not entirely referring to Microsoft's entire batch of GPUs, Bloomberg reports indicate that Microsoft shut down these resources in recent months, and Oracle's fiscal year 2027 Q1 (June-August) suggests that these GPUs shut down by Microsoft before the end of August should have been transferred elsewhere. How should we understand this adjustment in the Microsoft-Oracle partnership? It can be seen as a tiered adjustment to computing power demand: 1) Due to specification mismatches, Microsoft is pursuing newer chips, more precise network and delivery standards, and is replacing its GPUs with the latest configurations; 2) However, another group of customers is taking over the computing power released from older GPUs, and their computing power demands are also tiered. Some computing power demands require the latest version of the GPU, while others can be met by older GPUs. This post is sponsored by @bitget_zh, "Bitget Buys US Stocks: Instant Entry, Smooth Trading"