OpenAI's $300 Billion Cloud Deal with Oracle Reshapes AI Infrastructure Landscape

OpenAI reportedly signs $300 billion Project Stargate cloud deal with Oracle

OpenAI, which reportedly expects $12.7 billion in revenue this year, is also likely behind another $10 billion contract with the semiconductor giant Broadcom to design its own AI chip. While reporting quarterly earnings on Tuesday, Oracle CEO Safra Catz announced that three unnamed companies had signed "four multi-billion-dollar contracts" in Q1, part of a trend that she said is increasing Oracle's cloud infrastructure revenue by 77 percent this year. Overall, the company said that in Q1 it added more than $317 billion in future contract revenue, a massive dollar amount that sent share prices soaring and Chairman Larry Ellison to the top spot of the world's richest person list.

OpenAI reportedly on the hook for $300B Oracle Cloud bill

Tick tock Sam, just fifteen months before your first bill is due OpenAI will pay Oracle $300 billion over the course of five years to fuel Sam Altman's AI ambitions by providing five gigawatts of compute capacity. At least that's what unnamed sources familiar with the matter tell the Wall Street Journal, which reports that the contract is set to begin in 2027, giving the AI startup a little over a year to figure out how or perhaps who's going to be left holding the bill when it falls due. As it stands, OpenAI can't afford the checks it's writing. As of June, the AI flag bearer has annual recurring revenue of $10B. To be clear, that's revenue. The company isn't expected to turn a profit until at least 2029. Perhaps SoftBank is about to open its wallet after reportedly agreeing to chip in $19B to the OpenAI-led Stargate project that aims to build a series of giant AI Datacenters. Today's news comes just over a month after OpenAI announced that Oracle had agreed to furnish it with an additional 4.5 gigawatts of compute capacity, bringing its total compute commitment to 5 gigawatts, enough for two million additional GPUs. At the time, we estimated the cost of those GPUs at nearly $100 billion. However, that figure doesn't take into consideration the cost of the facilities and power plants necessary to support all those chips, and assumed OpenAI and friends would be paying today's prices for them. As we reported last week, OpenAI will reportedly begin fielding its own in-house silicon developed in collaboration with Broadcom, which may also factor into its cost analysis. While it remains to be seen how exactly OpenAI plans to pay its bills, it seems that Oracle's CTO and Founder Larry Ellison is already reaping the benefits of the arrangement. On Tuesday Ellison inched closer to overtaking Elon Musk as the world's richest man after the database giant turned GPU slinger's share price surged more than 30 percent in after hours trading. Driving that rally was a fat pipeline of purchase commitments that jumped 359 percent to $455 billion. CEO Safra Catz predicted sales will continue to grow over the next year. By 2031, Oracle expects its cloud infrastructure biz to crest $144 billion in annual revenues, up from $18 billion this year. The thing about purchase commitments is they're only as good as the customer who's making them. When Microsoft or Google say they're going to spend $80 billion or more a year on AI infrastructure they're probably good for it. The guy whose company is bleeding cash while boasting about spending $500 billion on AI datacenters with no obvious way to pay for them? Maybe wait for the check to clear before counting your profits. In any case, Oracle's revenue outlook suggests that either OpenAI isn't the only mega customer the aspiring cloud provider is courting or that the AI trend setter's $300 billion contract will be implemented in progressively larger phases tied to customer and revenue growth. The Register sought comment from Oracle and OpenAI; we'll let you know if they respond. ®

Oracle Lands $300 Billion OpenAI Cloud Deal, One of the Largest in History

The agreement will see Oracle supply OpenAI with roughly 4.5 gigawatts of computing capacity. OpenAI has struck one of the largest cloud computing deals in history with Oracle, agreeing to a contract worth about $300 billion over five years starting in 2027. According to the Wall Street Journal, the agreement will see Oracle supply OpenAI with roughly 4.5 gigawatts of computing capacity, an amount of power comparable to two Hoover Dams or enough to run around four million homes. The scale of the deal is staggering compared to OpenAI's current business. The AI company generates around $10 billion in annual revenue, making the long-term commitment a major financial bet on the future of its technology. For Oracle, the agreement represents a transformative moment. Shares of the company surged by nearly 43% following the announcement, the biggest single-day

OpenAI and Oracle strike $300B cloud computing deal to power AI - SiliconANGLE

OpenAI today confirmed that it has signed an agreement that will see it purchase computing infrastructure worth $300 billion from Oracle Corp. over a period of roughly five years, as part of its previously announced Project Stargate data center building initiative. The deal represents one of the biggest ever cloud contracts in history, and is a massive commitment that far outstrips OpenAI's current revenue, reflecting the frenzied rate of spending on artificial intelligence data centers by Silicon Valley companies. OpenAI and Oracle will construct 4.5 gigawatts of data center compute capacity, which is roughly equivalent to the electricity produced by more than two Hoover Dams, or the amount consumed by around four million U.S. homes, the Wall Street Journal reported today. The announcement came after Oracle's stock surged by more than 42% on Wednesday after it reported adding $317 billion in future contract revenue during its latest quarter. Oracle Chief Executive Safra Catz told analysts on a conference call that her company had signed contracts with three customers, one of which we now know was OpenAI. The first hint of the deal came in June, when Oracle said in a regulatory filing it had agreed a cloud services agreement that would generate more than $30 billion in revenue in fiscal 2027. The revenue it receives will increase with each year, as more data center infrastructure comes online. OpenAI revealed one month later that it had agreed to purchase 4.5 gigawatts of compute power from Oracle, but did not disclose the size of the contract at that time. Project Stargate was first announced at the White House in January, when OpenAI CEO Sam Altman and Oracle founder and Chief Technology Officer Larry Ellison (pictured) appeared alongside U.S. President Donald Trump, who said it was all about establishing American leadership in AI. The two partners initially pledged to build at least $100 billion worth of data centers, before expanding the effort to $500 billion in the "coming years". OpenAI later confirmed that Stargate is the brand for all of its data center infrastructure initiatives, but has not revealed the specifics of that pact, which also involves the technology investor SoftBank Group Corp. After announcing Stargate, OpenAI has already secured commitment for more than half of $500 billion goal, and construction is already underway at a location in Abilene, Texas. OpenAI and Oracle aren't the only big tech firms racing to build out AI data center facilities as fast as they can. Rivals including Amazon Web Services Inc., Microsoft Corp., Google LLC and Meta Platforms Inc. have pledged to spend a combined $300 billion on building their own giant data centers this year. But OpenAI's and Oracle's venture may be perceived by some as somewhat more risky. OpenAI is very far from being profitable. On on the contrary, it's bleeding cash. In June it disclosed that it's generating approximately $10 billion in annual revenue, which is less than a fifth of the $60 billion in expenses it will pay each year on building out data centers and renting compute capacity from other data center operators. Meanwhile, Oracle is betting a large chunk of its future revenue on just one customer, and will probably have to take on debt to fund the purchase of the AI chips needed in its planned data centers. Altman has already committed to a number of seemingly risky ventures. His company is also said to be working with Broadcom Inc to develop its own custom AI chips, and reportedly trying to build a device that will compete with Apple Inc.'s iPhone. The company, which has taken billions of dollars in funding, is burning through more money than pretty much any startup in history. Last year, Altman reportedly told investors he doesn't expect OpenAI to become profitable until 2029 at the earliest, and will likely need to spend $44 billion to get there. As such, OpenAI and Oracle's deal is a gamble that ChatGPT's explosive growth will continue to accelerate and end up being used by billions of consumers and thousands of businesses globally. But it faces some serious competition from rivals such as Google and other AI startups like Anthropic PBC and has an increasingly tense relationship with its main financial backer Microsoft. The Journal says that Oracle has a much greater debt load relative to its cash holdings compared to Microsoft, Amazon and Meta. Its investments on AI infrastructure have already outpaced its cash flow, and it has a total debt to equity ratio of 427%, compared to just 32% for Microsoft. OpenAI and Oracle have also committed to a separate initiative that will see them build a massive data center complex in the United Arab Emirates, as part of a deal that was negotiated by Trump and that country's government. It's a joint venture that also involves SoftBank and the Emirati investment firm G42 and other stakeholders. However, G42 will contribute to the financing of OpenAI's U.S. data centers too, with the deal being that for every dollar it invests in the Emirates, it will spend an equivalent amount on U.S. data centers.

oracle: OpenAI signs $300 billion data center pact with tech giant Oracle - The Economic Times

OpenAI has signed a deal with tech giant Oracle to build $300 billion in computer infrastructure that will be used to develop artificial intelligence technologies and deliver them to businesses and consumers, two people familiar with the agreement said. The two companies have agreed to spend $300 billion on the construction of data centers over roughly five years, said the people, who spoke on the condition of anonymity because they were not authorized to discuss the deal. In July, Oracle laid out part of the agreement in a regulatory filing, but it did not reveal many details. The deal was previously reported by The Wall Street Journal. Oracle's stock price climbed more than 40% on Wednesday after the company revealed that it had added more than $317 billion in future contract revenue during its latest financial quarter. Project Stargate is part of a wider effort to build AI data centers around the world. OpenAI, Amazon, Google, Meta and Microsoft plan to spend more than $300 billion combined on giant data centers by the end of this year. In January, OpenAI, Oracle and Japanese conglomerate SoftBank joined President Donald Trump in announcing that they would create at least $100 billion in computing infrastructure in the United States as part of Project Stargate. They also said they planned to expand the effort to $500 billion in the coming years. After signing its deal with Oracle, OpenAI has secured commitments for more than half of that goal. Construction is already underway on data centers in Abilene, Texas, and the companies plan to build in other locations as well. Separately, OpenAI plans to build a massive computing complex in the United Arab Emirates, following a deal between the Trump administration and the Persian Gulf nation. This facility is part of a venture with Oracle, SoftBank, UAE artificial intelligence firm G42 and others. G42 will also contribute money to the construction of OpenAI data centers in the United States, OpenAI has said. For every dollar that G42 and its partners invest in the UAE, they will invest an equivalent amount in the U.S. facilities. The size of the planned data center in the Middle East suggests that G42 will invest tens of billions of dollars in each country. (The New York Times has sued OpenAI and its partner, Microsoft, claiming copyright infringement of news content related to AI systems. OpenAI and Microsoft have denied those claims.)