Oracle did not deny the report. A company spokesperson said demand for its AI cloud infrastructure "remains strong," including for earlier-generation chips, and Oracle said in September that it was renewing contracts for four-year-old chips at a 20% premium to the original price.

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The deal dates to 2023. Oracle agreed to provide Microsoft with server capacity to power a new AI-assisted version of the Bing search engine. According to Bloomberg, Microsoft has been switching that rented capacity off in recent months because the older-generation chips inside Oracle's hardware no longer fit its needs. The full size of the deal was never disclosed.

Take a 66-year-old retiree who bought 1,000 shares on Nov. 7, 2016, at $39.09 a share, a $39,090 investment. Those shares were worth $328,330 at the peak. On Friday they were worth $116,100. They also collect $2,700 a month from Social Security and hold another $800,000 in retirement savings, so Oracle is now 12.7% of a $916,100 portfolio. The question in front of them is whether this week's news is a reason to sell.

That bounce does little for anyone who has owned Oracle for a while. The stock closed at $328.33 on Sept. 10, 2025. At Friday's close it was 64.6% below that peak, 40.7% lower for the year and 11.2% lower for the week alone.

Oracle (NYSE: ORCL) shareholders got one more piece of bad news on Friday. Bloomberg reported that Microsoft is winding down a deal to rent artificial intelligence computing capacity from Oracle, after declining to renew the contract. Oracle stock fell as low as $109.21, down 5.2% from Thursday's close and its lowest price in more than a year. Then buyers stepped in, and the stock finished the day up 0.8% at $116.10.

Selling 300 shares would cut Oracle from 12.7% to 8.9% of the portfolio for about $3,465 in federal tax.

A retiree's 1,000 shares, bought for $39,090 in 2016, are worth $116,100, down from $328,330 at the September 2025 peak.

Microsoft is winding down an AI computing rental deal with Oracle. The stock hit a one-year low of $109.21, then closed up 0.8% at $116.10.

Story Continues

The report landed in a week that had already been rough for Oracle shareholders:

Monday, Nov. 2: the stock fell 8.8% after Oracle announced plans to raise $20 billion, half through new stock and half through bonds.

Thursday, Nov. 5: it fell another 6.9% as artificial intelligence stocks sold off across the market.

Friday, Nov. 6: it fell as much as 5.2% on the Microsoft report, then recovered to close up 0.8%.

What the retiree's shares have done

Measured from the purchase, the investment still looks good. The 1,000 shares cost $39,090 and are worth $116,100, a gain of $77,010, or 197%. Oracle has also paid $12.85 a share in dividends since that purchase, or $12,850 on 1,000 shares. Today it pays 50 cents a share each quarter, $2,000 a year on this position, a yield of 1.72% at Friday's price.

Measured from the peak, the same shares have given back $212,230. That is the number that keeps most long-term holders up at night, and it is the wrong one to anchor on. The $328,330 was never cash. The decision in front of this retiree is about the $116,100 that exists today.

The case for holding

Oracle's business is still growing quickly. In its most recent quarter, revenue rose 30% to $19.3 billion and cloud infrastructure revenue rose 121% to $7.4 billion. Its backlog of signed contracts reached $664 billion.

The stock is also far cheaper than it was. At $116.10, Oracle trades at about 18 times its earnings over the past year and about 15 times what analysts expect it to earn next year. Of the 43 analysts tracked, 35 rate it a buy or strong buy, and their average price target is $235.46, about double Friday's close.

Warren Buffett's oldest rule applies here. He has quoted his teacher Benjamin Graham for decades: "Price is what you pay; value is what you get." A stock that has fallen 65% can be a better value than it was at the top, if the business behind it is still sound.

The case for trimming

The worries are about how Oracle is paying for its growth. The company spent $55.7 billion on equipment and data centers in its 2026 fiscal year, its total debt has reached $167 billion, and analysts expect it to burn more cash than it brings in through its 2028 fiscal year. The $20 billion raise this week added more stock and more debt on top of that.

The backlog is also concentrated. According to S&P, a single AI customer accounts for about half of the $664 billion. Microsoft's decision is small next to that, but it shows that customers can and do walk away from AI computing deals that no longer fit.

For a retiree, one stock at 12.7% of everything they own is a large bet. A further 50% drop would cost about $58,000, which is almost two years of the $32,400 Social Security pays them.

A middle path

Selling part of the position is a reasonable option for this retiree. If they sell 300 of the 1,000 shares at Friday's price:

Proceeds: $34,830

Taxable gain: $23,103, since each share cost $39.09

Federal tax at the 15% long-term rate: about $3,465

What remains: 700 shares worth $81,270, or 8.9% of the portfolio, still paying $1,400 a year in dividends

If the shares sit in a traditional IRA instead of a taxable account, there is no tax on the sale itself, and the trim costs nothing today.

That keeps most of the upside if the analysts are right and cuts the damage if this week turns out to be the start of something worse. It also turns a portion of a paper gain into cash, which is the gain that actually pays bills.

The bottom line

Microsoft walking away from an Oracle AI deal is a real headline, and the stock's quick recovery on Friday shows the market did not treat it as a disaster. For a 66-year-old who turned $39,090 into $116,100 over 10 years and collected $12,850 in dividends along the way, the bigger question is how much of their retirement should ride on one company. Selling 300 shares would cut Oracle to 8.9% of the portfolio for about $3,465 in tax, and the remaining 700 shares would keep paying $1,400 a year.

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