Oracle has cancelled a $1.1‑$1.4 billion order for its GB300 NVL72 racks, a high‑density, NVIDIA‑powered AI server platform that includes 72 B300 GPUs and 36 Grace CPUs. The order covered 300 to 400 racks, each priced at approximately $3.5 million, bringing the total contract value to roughly $1.1 billion at the lower end and $1.4 billion at the higher end.
Super Micro Computer (SMCI) had been counting on the revenue from this deal to support its 2025‑2026 guidance. In Q4 FY2025 SMCI reported net sales of $5.8 billion and a non‑GAAP diluted EPS of $0.41. In the following quarter, net sales fell to $5.0 billion and EPS to $0.35, reflecting a decline in gross margin from 13.1% to 9.3% and a negative operating cash flow of $918 million. Oracle, by contrast, posted Q1 FY2026 revenue of $14.9 billion, up 12% year‑over‑year, and a non‑GAAP EPS of $1.47, underscoring the scale of the customer’s cloud‑infrastructure spend.
The cancellation is widely linked to the federal indictment of SMCI co‑founder Yih‑Shyan “Wally” Liaw for alleged chip smuggling to China. The legal action has raised concerns among hyperscale customers about supply‑chain trust and regulatory compliance, prompting Oracle to distance itself from SMCI’s products. The move also signals Oracle’s intent to secure alternative suppliers such as Wiwynn, Dell Technologies, and Hewlett Packard Enterprise for its AI‑driven cloud workloads.
Investors have reacted to the cancellation with heightened scrutiny of SMCI’s concentration risk. The company’s AI GPU platform segment accounted for over 70% of revenue in Q4 FY2025 and over 75% in Q1 FY2026, making the loss of a single large customer a significant headwind. Despite the setback, SMCI’s order book remains robust, with more than $13 billion in Blackwell Ultra orders, and the company has raised its FY2026 revenue guidance to at least $36 billion.
Oracle’s decision reflects a broader strategy to mitigate supply‑chain risk while accelerating its cloud‑infrastructure expansion. The company’s Q1 FY2026 results showed strong growth in cloud revenue and a substantial increase in remaining performance obligations, indicating robust future demand. By shifting away from SMCI, Oracle aims to preserve supplier reliability and maintain momentum in its AI‑cloud initiatives.
The cancellation underscores the importance of regulatory compliance and supply‑chain integrity for hyperscale customers. For SMCI, the event highlights the need to diversify its customer base and strengthen governance. For Oracle, it demonstrates a proactive approach to risk management in its pursuit of AI‑driven cloud growth.
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