Oracle is 'going to do incredibly well,' Jensen Huang said in an interview with Jim Cramer at the CNBC Investing Club's Monthly Meeting.
Nvidia CEO Jensen Huang on Tuesday brushed off a media report that said Oracle is seeing thin margins on its business of renting out Nvidia chips to customers. Oracle is "going to do incredibly well," Huang said in an interview with Jim Cramer at the CNBC Investing Club's Monthly Meeting, which was held Tuesday afternoon at the New York Stock Exchange.
Shares of software giant Oracle fell as much as 5% Tuesday after tech publication The Information reported on the state of Oracle's Nvidia-centered cloud business amid the high cost of Nvidia chips and aggressive pricing on AI rentals. The stock eventually closed off its lows, down 2.5% to $284.24 a share. According to the report, which cited internal documents, Oracle's Nvidia cloud business generated $900 million in sales in the three months ending in August with gross margins of 14%. That was well below the company's roughly 70% overall gross margin. Against that backdrop, Huang offered a more nuanced perspective, suggesting that short-term margin pressure wouldn't be out of the question with new chips. Nvidia's market-leading AI chips are known as graphics processing units, or GPUs. "When you first ramp up a new technology, there's every possibility that you might not make money in the beginning, but over the life of the system, they'll be wonderfully profitable," Huang said. The Nvidia CEO also underscored the operational complexity of operating large-scale data centers for AI computing. "What Oracle does with Nvidia's systems is not easy," Huang continued. "These things are giant supercomputers. You've got to build infrastructure, you've got land, it's got power, it's got cooling, and then you have to operate these things." For its part, Oracle has highlighted that it has booming demand. In September, the company said remaining performance obligations — otherwise known as its backlog of cloud contracts — jumped 359% year over year in its fiscal 2026 first quarter. That was buoyed primarily by a $300 billion compute deal with ChatGPT creator OpenAI, according to media reports . Oracle also forecasted $144 billion in cloud infrastructure revenue by 2030, up from just over $10 billion in 2025. The stock soared 36% in a single day on those new cloud contracts and long-term financial projections, even as quarterly earnings and revenue missed estimates. The stock has since dropped about 13%, giving back some of that surge, amid questions about the sustainability of AI investments. Huang also spoke with Cramer about three other key Nvidia partnerships and the importance of America winning the AI arms race .
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