Oracle's Billion-Dollar Gamble: Gas-Powered Data Centers Fuel AI Ambitions

Oracle will reportedly power a giant data center with gas generators

has published a deep dive into operations at Oracle, chronicling the software giant's rise in cloud computing and current push into powering artificial intelligence projects. The publication reported that Oracle has promised to develop tens of billions of dollars in data centers, which have become a hot business. Notably, Oracle landed a deal to back operations at OpenAI, in a partnership that will give the AI company . According to Bloomberg, that's enough energy to power "millions of American homes." So far, Oracle has seemed willing to throw money at its AI data center projects, no matter how expensive or irresponsible the needs might be. For instance, a source said the company plans to spend more than $1 billion a year powering a single data center in Texas with gas generators rather than waiting for a utility connection to be built. When completed, this data center is expected to be one of the largest known sites, with computing power of 1.4 gigawatts. In addition to the huge monetary cost, such a project can also have negative human and environmental impact. The Elon Musk-owned xAI is under fire after a supercomputer for its artificial intelligence operations became in Memphis thanks to methane-powered turbines. Other majors, including , and , have chosen to try nuclear power for their data center projects, which comes with its own potential complications and risks. Purely on the financial side, Oracle's decision to invest so much so quickly meant the company reported its first negative annual cash flow since 1990. Should the current rates of AI investment turn out to be a bubble, it could be very bad news to have many billions of dollars on the line.

Oracle Will Reportedly Spend $1 Billion a Year on a Gas-Powered Data Center

The new site will provide 1.4 gigawatts of compute power, enough to power millions of homes. Oracle is going all-in on its AI-focused cloud business, pouring billions into building massive new data centers. One site under construction in West Texas will reportedly cost the company around $1 billion just to keep the lights on. Bloomberg reported, citing unnamed sources familiar with the plans, that Oracle intends to spend more than $1 billion a year to run a new West Texas megasite on gas generators rather than wait for a utility hookup. It can take years to get approval and infrastructure to pull the kind of electricity these massive data centers need from local grids. Oracle’s workaround shows just how much it’s willing to spend, how fast it wants these sites running, and how little it cares for any environmental consequences. Oracle, founded all the way back in 1977 and best known for its business database software, has reinvented itself in the last decade or so as a player in cloud services, after years of initially dismissing the idea. Its big bet now is on AI-focused cloud computing. In recent years, Oracle has landed big deals with major tech firms and quickly built a reputation for handling AI projects. A big draw is the company’s “bare metal†approach, which gives clients their own dedicated serversâ€"opposed to sharing them with other clients. This makes the servers faster and more secure. Oracle has now become the backbone for many AI companies. Things really took off for the company when TikTok came aboard, and by 2022, all U.S. user traffic on the app was flowing through Oracle servers. This deal quickly generated over $1 billion of annual revenue for the company. Today, the company is helping power Elon Musk’s xAI from a Utah data center and building a cluster of tens of thousands of AI chips for Nvidia. All these deals have helped make Oracle founder Larry Ellison the second-richest man in the world, just behind Elon Musk. Oracle also recently signed what Bloomberg calls the largest single cloud deal ever with OpenAI for its Stargate project, an ambitious joint venture announced at the White House back in January. The AI company has agreed to develop about 4.5 gigawatts of data center power with Oracle. For context, one gigawatt is enough to power about 750,000 homes. Still, we've seen little movement in the real world to indicate the project is on track. Oracle’s new gas-powered data center is going up in Shackelford County, Texas, not far from another one of its data centers in Abilene. Developed by Vantage Data Centers, the site will have a massive 1.4-gigawatt capacity, making it one of the largest data centers in the world. Oracle did not immediately respond to a request for comment from Gizmodo.