Oracle Sinks on Report Its Cloud Margins Are Lower Than Expected

Oracle Corp. shares tumbled after a report that the software maker’s profit margin in its cloud computing business is lower than many on Wall Street have been estimating.

While Oracle generated roughly $900 million in revenue from the rental of servers powered by Nvidia Corp. chips during the three months ended in August, the company only managed about $125 million in gross profit, the Information reported, citing internal corporate documents. Oracle shares fell as much as 7.1% on Tuesday before paring much of the decline, while Nvidia dipped as much as 0.6%.