OpenAI has signed an unprecedented $300 billion (€256 billion) contract with Oracle for computing power over five years. The deal, with a required capacity of 4.5 gigawatts, is one of the largest cloud contracts ever.
Oracle’s stock shot up by no less than 43 percent after the company announced in its quarterly figures that it had signed contracts worth $317 billion with three customers. As a result, founder Larry Ellison saw his fortune increase by more than $100 billion to nearly $400 billion, bringing him close to Elon Musk as the richest person in the world.
The agreement starts in 2027 and runs for five years. For OpenAI, which currently has annual revenues of approximately $10 billion, the contract represents an average annual expenditure of $60 billion. The deal requires 4.5 gigawatts of power capacity, comparable to the consumption of approximately four million households.
Oracle is thus concentrating a large part of its future revenue on a single customer. In addition, Oracle will likely have to take on debt for the necessary AI chips.
Challenges for OpenAI
The contract between OpenAI and Oracle represents an unprecedented investment in AI data center infrastructure. CEO Sam Altman is struggling with a constant shortage of computing power, which is hampering the rollout of new products. According to earlier reports, OpenAI lost $44 billion before it expects to turn a profit in 2029.
The company is attempting to reduce its dependence on Microsoft, following growing frustration over supply shortages. Oracle is working with data center builder Crusoe on locations in Wyoming, Pennsylvania, Texas, Michigan, and New Mexico.
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