Oracle bags Pentagon software deal worth $7B
What's the story
The US Department of Defense has awarded a nearly $7 billion contract to Oracle, the tech giant co-founded by billionaire Larry Ellison. The deal is for a period of up to 10 years and covers the use of Oracle's software in on-premises data centers across various branches of the military, the intelligence community, and Coast Guard.
Taxpayer savings
Deal expected to save taxpayers at least $441 million
The Pentagon's Chief Information Officer, Kirsten Davies, said the deal would save taxpayers at least $441 million.
"By fundamentally improving how we procure on-premises Oracle capabilities, we are driving at least $441 million in taxpayer savings while rapidly and effectively serving our warfighters," she said.
The contract includes both perpetual and subscription-based software licenses as well as maintenance and consulting services.
Political ties
Ellison a long-time Trump supporter
Ellison has been a long-time supporter of President Donald Trump, reportedly donating $45 million to a nonprofit supporting Trump's 2024 presidential campaign.
He was one of the first guests at the White House during Trump's second term, where he announced plans for Stargate artificial intelligence data centers in the US.
The Defense Department also recently announced agreements with Oracle and other tech companies for AI deployments in classified networks.
Market response
Oracle's shares have dropped 38% this year
Oracle's shares have dropped 38% this year as investors worry that artificial intelligence (AI) could hurt growth prospects for software incumbents.
The company is also racking up tens of billions of dollars in debt to build out AI data centers.
In June, Oracle reported a 2% decline in quarterly software revenue from a year earlier, even though its database software remains widely used by large companies.
Revenue growth
Cloud revenue has surged by 47%
Oracle's cloud revenue has surged by 47% as it rushes to supply AI computing power to OpenAI and other clients.
The Pentagon contract is part of a broader effort by the Department of Defense to consolidate software licenses into a single contract, cutting costs and eliminating fragmented purchasing.
This strategy was also seen in a similar deal with Microsoft earlier this year.