OpenAI has signed a $300B cloud deal with Oracle
What's the story
OpenAI has signed a massive five-year contract with Oracle, the Wall Street Journal reported. The deal is worth an astonishing $300 billion and involves the purchase of computing power by OpenAI from Oracle. If confirmed, this would be one of the largest cloud contracts in history. The agreement will come into effect in 2027.
Cloud transition
OpenAI's cloud transition and Stargate Project involvement
OpenAI has been using Oracle's computing power since summer 2024. The company also moved away from exclusively relying on Microsoft Azure as its sole cloud provider in January. This shift coincided with OpenAI's involvement in the Stargate Project, where it, SoftBank, and Oracle have pledged $500 billion toward US data center projects over four years.
AI expansion
Cloud deal with Google amid AI competition
OpenAI's growing computing needs have also led it to sign a cloud deal with tech giant Google, Reuters reported. This comes even as the two companies compete for AI dominance.
Revenue surge
Oracle's soaring success
Oracle CEO Safra Catz revealed during the company's quarterly earnings call that three unnamed firms had signed four multi-billion-dollar contracts in Q1. This trend has contributed to a 77% increase in Oracle's cloud infrastructure revenue this year. The company also added more than $317 billion in future contract revenue during Q1, a figure that has significantly boosted its share prices and made chairman Larry Ellison the world's second richest person.