Oracle drops a $7 billion deal to lease AI chips to Tencent after US pushback, FT reports

Oracle has reportedly cancelled a roughly $7 billion agreement to lease computing power built on advanced AI chips to Chinese internet giant Tencent. The Financial Times reported the cancellation on Wednesday, citing two people with knowledge of the matter, and Reuters and the New York Post relayed it. Oracle, Tencent and the White House did not immediately respond to requests for comment, according to the Post. Everything below rests on that single original report, and we have not seen a confirmation from any of the three parties.

What the deal would have been

Per the FT account as summarized by the Post, Tencent would have had access to up to 100,000 AI chips at data centers in Asia over a five-year term. US export controls bar the most advanced Nvidia chips from being sold to Chinese companies, so Chinese firms have looked for a workaround: renting capacity in data centers outside China. Trump administration officials told Oracle they were concerned about the arrangement, and it was dropped. The FT also reported that Chinese officials separately pressed Tencent to use domestic chips instead of Western ones.

The number behind the number

These are our own calculations from the reported figures, not numbers from the report:

• $7 billion over five years is about $1.4 billion of revenue a year, if the full amount had been realized.
• Spread across up to 100,000 chips, that is about $70,000 per chip over the term, or roughly $14,000 per chip per year.
• Against Oracle's market value of about $374.2 billion at Wednesday's close (Nasdaq data), the contract's total value is about 1.9%.

So the lost revenue is small next to the company. The reason it matters is what Oracle needs from each new customer. As we reported on September 24, Oracle's 10-Q disclosed $288 billion of data center lease commitments that have not yet started, which it has to fill with paying tenants. On November 2 it filed to sell $10 billion of stock and $10 billion of bonds. A buyer that would have paid for up to 100,000 chips for five years was demand Oracle can no longer count on, in a year when investors are already asking whether the buildout will find enough customers.

How the stock moved

Oracle closed at $123.77 on Wednesday, down $2.42 or 1.92% from $126.19, after trading between $121.89 and $129.85, according to Nasdaq data. It was at about $124.48 in after-hours trading as of 5:50 p.m. Eastern. The move stood out because the broader market rallied hard: the Dow rose 1,569 points to 53,356 in our close report. The stock sits 50.6% below its November 2025 peak.

We cannot say how much of the day's decline came from the Tencent report, the stock offering overhang or other factors. Oracle traded near $123.50 on Monday after filing the offering, close to Wednesday's close.

Who it affects

For Oracle and other US cloud providers, the episode sets a precedent: renting restricted chips from a data center in a third country is not a safe route around export controls, and a large contract can be undone by Washington after it is signed. For Chinese companies, it narrows the offshore rental option and pushes them toward domestic chips, which Beijing is also encouraging. For Nvidia and other chipmakers, it is another sign that the China market for top-end parts depends on policy rather than demand.

The report also touches Oracle's political position. The Post notes that chairman Larry Ellison is a major Trump ally and that Oracle was part of the group that acquired most of TikTok's US operations last year.

What to watch

• Whether Oracle or Tencent confirms the cancellation, and whether any other cloud provider's China-linked chip leases draw similar scrutiny.
• Whether Commerce Department export rules are updated to cover remote access to restricted chips.
• Pricing of the $10 billion stock sale, which was sized off the October 30 close.

Sources: Financial Times and Reuters (reports of the cancellation); New York Post (Nov. 4, 2026); Nasdaq quote data for ORCL, Nov. 4, 2026; Oracle SEC filings as reported in our earlier stories. Per-year and per-chip figures are our arithmetic. This is market information, not investment advice.