OpenAI has signed a contract with Oracle to purchase USD 300 billion in computing power over approximately five years, making the deal one of the largest cloud contracts ever signed.
The Oracle contract will require 4.5 gigawatts of power capacity, equivalent to the electricity generated by more than two Hoover Dams or the power used by four million homes, according to The Wall Street Journal.
The collaboration, which starts in 2027, raises several key questions among financial experts, such as those from the Wall Street Journal. First, OpenAI was generating roughly USD 10 billion in annual revenue and had not turned a profit until 2029. Additionally, Oracle is putting a big part of its future revenue at risk by relying on a single customer, with a probability of taking on debt to acquire the AI chips required to power its data centers.
The deal assumes that ChatGPT will continue to grow and be adopted by billions of people worldwide, including major businesses and governments. After relying on Microsoft to exclusively provide its computing power, OpenAI received permission to find new providers.
Oracle is collaborating with the data-center builder Crusoe, among others, as part of the deal. Data centers will be built in various locations across the country, including Wyoming, Pennsylvania, Texas, Michigan, and New Mexico, according to a person familiar with the matter. It's also expected to create over 100.000 jobs in the US, mainly in construction and operations roles, to support the data centers.
Projects powered by AI
This partnership is part of the Stargate Project, OpenAI's plan to build new AI infrastructure in the US with partners such as SoftBank, Oracle, and MGX. Shortly after this announcement, Oracle Health launched the Oracle AI Center of Excellence for Healthcare to assist organizations in using AI. The new project provides a hub of resources and expertise that will assist health systems and hospitals in deploying and optimising AI throughout their organizations.
