Forget Nvidia: Curbs on China’s Remote Chip Access Are a “Nightmare Scenario” for Oracle Gian Estrada Fri, November 13, 2026 at 10:28 AM EST 4 min read ORCL -2.26% NVDA -3.71% BABA -0.55% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
The U.S. is reportedly finalizing a rule to stop Chinese firms renting AI chips abroad.
Oracle has more at stake than Nvidia, because it pays for the capacity they rent.
The reported dollars are small, but Oracle's free cash flow is deep in the red.
The U.S. is getting ready to stop Chinese companies from renting American AI chips in data centers outside China. Investors sold Alibaba, and the spotlight landed on Nvidia (NVDA:NASDAQ), already deep in its Megaspeed scandal. I'd argue Oracle (ORCL:NYSE) has more to worry about.
The Information reported late on Nov. 11 that the Commerce Department is finalizing the rule.
On the Nov. 12 episode of Odd Lots, Bloomberg News tech and geopolitics reporter Mackenzie Hawkins named a second company:
"This is sort of nightmare scenario for NVIDIA if remote access were to be restricted. It's also a nightmare scenario for some hyperscalers like Oracle that counts, you know, Chinese offtakers as a significant portion of its business."
On Nov. 4, the Financial Times reported that Oracle had cancelled a five-year deal worth about $7 billion that would have given Tencent up to 100,000 advanced AI chips in Southeast Asian data centers, after U.S. officials raised concerns. As Hawkins pointed out, the deal was legal. The administration stepped in anyway.
The rule would reportedly cover seven countries, including Malaysia, where Oracle runs several data centers for ByteDance, according to the FT. U.S.-run data centers there could keep adding chips without a license if they block remote access from China.
The Tencent deal comes to about $1.4 billion a year, and the whole deal was about 1% of Oracle's $664 billion of remaining performance obligations at Aug. 31. OpenAI reportedly accounts for about half of the backlog. The reported Tencent contract was small relative to Oracle's total backlog, but the available figures don't establish the size of its overall Chinese-customer exposure.
The consensus available after the Tencent cancellation still projects Oracle's revenue nearly tripling, from $67.4 billion in fiscal 2026 to $184 billion in fiscal 2029:
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Nvidia has sold the chips in Oracle's Malaysian data centers. If ByteDance has to leave, Oracle has to fill that capacity. That matters because Oracle's free cash flow went from $11.8 billion in fiscal 2024 to negative $23.7 billion in fiscal 2026:
Total debt, leases included, rose from $75.9 billion in fiscal 2022 to $167 billion in fiscal 2026:
S&P rates Oracle BBB-, one notch above junk. Bloomberg also reported that Microsoft is winding down a 2023 deal to rent older Nvidia chips from Oracle.
A remote-access rule doesn't break Oracle's case on its own. GPU utilization was 97.9% last quarter, and GPUs up for renewal went at a 20% premium, so Oracle should find new renters for whatever ByteDance gives up. CFO Hilary Maxson has also laid out a path to positive free cash flow in the second half of fiscal 2028, and more than $30 billion in fiscal 2029.
Still, every renter Oracle replaces costs it time, and with free cash flow this negative, time is short. Oracle has more reason than Nvidia to lose sleep over this rule, even if the only reported dollars so far are small. Its mid-December report is the next chance to hear how much Chinese business it still has.
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