Nvidia: The Supplier That Is Also a CustomerThin moat

Oracle (ORCL) — moat facet

Nvidia sells Oracle its chips and buys Oracle capacity, and in that exchange the chip maker keeps the larger share of the profit.

Nvidia sits on both sides of Oracle's AI business. It supplies the GPUs that fill Oracle's datacenters: in December 2025 Oracle's chairman said it would "continue to buy the latest GPUs from NVIDIA"1. In the same quarter Nvidia was one of the customers whose new commitments added $68 billion to Oracle's remaining performance obligations2.

Oracle and Nvidia, selected amounts ($bn)68RPO added, Nov2025 quarter75Prepaid or customer-suppliedhardware, 202630+AI cloud contracts,Q1 FY20272.7Ampere stake gainOracle Q2 and Q4 FY2026 and Q1 FY2027 releases; Form 10-K FY2026
The Nvidia commitment came in the $68 billion quarter.

A supplier that is also a customer is an unusual relationship to compete with. Nvidia earns a margin when it sells Oracle the chips, and Oracle earns a margin when it rents computing back to Nvidia or to others. The reported 14% gross margin Oracle earned on renting out Nvidia chips in the August 2025 quarter3 gives a sense of which side of that exchange keeps more.

Oracle's response is to avoid being tied to one supplier. It sold its stake in the chip designer Ampere for a $2.7 billion gain4 and adopted what its chairman called "a policy of chip neutrality"5, working with all its CPU and GPU suppliers.

The relationship matters most for pricing. When Nvidia's chips are scarce, Nvidia sets the price and Oracle passes it on; in contracts where the customer supplies its own GPUs, which were part of the $75 billion of prepaid and customer-supplied hardware Oracle reported by June 20266, Oracle avoids that cost.

The balance of power shows in who carries the cost of the chips. Oracle said in June 2026 that the prepaid and customer-supplied hardware portions of its large AI contracts totalled $75 billion, which substantially reduces the capital Oracle must raise7. Every contract structured that way moves the Nvidia bill from Oracle's balance sheet to the customer's.

This is a dependence, not a rivalry. The measure of it is how much new business arrives with customers paying for the chips; Oracle booked more than $30 billion of additional AI cloud contracts in the first quarter of fiscal 20278, and whether they keep being structured to spare Oracle's capital will tell whether it is renting Nvidia's margin or its own.

Moat trajectory: Holding steady

Chip neutrality adopted; customer-supplied GPUs growing.

The number that tests this moat
Reported
AI cloud contracts booked, latest quarter
More than $30bn (Q1 FY2027)

New business and how it is structured; contracts that require Oracle to buy all the chips would deepen the dependence.

Source: Oracle Q1 FY2027 results release ↗
References
  1. ReportedIt supplies the GPUs that fill Oracle's datacenters: in December 2025 Oracle's chairman said it would "continue to buy the latest GPUs from NVIDIA".
    Oracle second-quarter fiscal 2026 results release, Form 8-K exhibit 99.1 - multicloud datacenters, regions, chip neutrality and new commitments from Meta and NVIDIA. — Q2 FY2026 · publ. 10 December 2025 · source ↗
  2. ReportedIn the same quarter Nvidia was one of the customers whose new commitments added $68 billion to Oracle's remaining performance obligations.
    Oracle second-quarter fiscal 2026 results release, Form 8-K exhibit 99.1 - multicloud datacenters, regions, chip neutrality and new commitments from Meta and NVIDIA. — Q2 FY2026 · publ. 10 December 2025 · source ↗
  3. ReportedThe reported 14% gross margin Oracle earned on renting out Nvidia chips in the August 2025 quarter gives a sense of which side of that exchange keeps more.
    CNBC, Oracle confirms Meta cloud deal; fiscal 2030 targets of $225 billion revenue and $21 EPS; AI infrastructure margins and AI database targets. — October 2025 · publ. 16 October 2025 · source ↗
  4. ReportedIt sold its stake in the chip designer Ampere for a $2.7 billion gain and adopted what its chairman called "a policy of chip neutrality", working with all its CPU and GPU suppliers.
    Oracle Corporation Form 10-K for fiscal 2026 (year ended 31 May 2026) - financial statements and notes: income statement, cash flow, borrowings, leases, equity and commitments. — FY2026 · publ. 22 June 2026 · source ↗
  5. ReportedIt sold its stake in the chip designer Ampere for a $2.7 billion gain and adopted what its chairman called "a policy of chip neutrality", working with all its CPU and GPU suppliers.
    Oracle second-quarter fiscal 2026 results release, Form 8-K exhibit 99.1 - multicloud datacenters, regions, chip neutrality and new commitments from Meta and NVIDIA. — Q2 FY2026 · publ. 10 December 2025 · source ↗
  6. ReportedWhen Nvidia's chips are scarce, Nvidia sets the price and Oracle passes it on; in contracts where the customer supplies its own GPUs, which were part of the $75 billion of prepaid and customer-supplied hardware Oracle reported by June 2026, Oracle avoids that cost.
    Oracle fourth-quarter and fiscal 2026 results release, Form 8-K exhibit 99.1 - financing, $75 billion of prepaid and customer-supplied hardware, Oracle Health and multicloud. — FY2026 · publ. 10 June 2026 · source ↗
  7. ReportedOracle said in June 2026 that the prepaid and customer-supplied hardware portions of its large AI contracts totalled $75 billion, which substantially reduces the capital Oracle must raise.
    Oracle fourth-quarter and fiscal 2026 results release, Form 8-K exhibit 99.1 - financing, $75 billion of prepaid and customer-supplied hardware, Oracle Health and multicloud. — FY2026 · publ. 10 June 2026 · source ↗
  8. ReportedThe measure of it is how much new business arrives with customers paying for the chips; Oracle booked more than $30 billion of additional AI cloud contracts in the first quarter of fiscal 2027, and whether they keep being structured to spare Oracle's capital will tell whether it is renting Nvidia's margin or its own.
    Oracle first-quarter fiscal 2027 results release, Form 8-K exhibit 99.1, with supplemental tables - commentary, bookings, capacity delivered and guidance. — Q1 FY2027 · publ. 10 September 2026 · source ↗
Sources
Generated September 25, 2026