OpenAI Signs $300 Billion Computing Deal with Oracle for Future Growth

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OpenAI has signed a landmark contract worth $300 billion with Oracle to purchase computing power over the next five years, reported the Wall Street Journal. This deal, set to begin in 2027, ranks among the largest cloud computing agreements in history.

The partnership follows July’s announcement of a broader project involving Oracle, SoftBank, and former President Trump, aimed at building data centers with a combined capacity of 4.5 gigawatts. Details on OpenAI’s payments for the data centers were not disclosed.

Oracle’s CEO, Safra Catz, confirmed the significant boost in cloud infrastructure revenue during a recent earnings report, highlighting that several unnamed companies, likely including OpenAI, contributed to a remarkable 77 percent increase in Oracle’s Q1 revenue.

This massive agreement signifies OpenAI’s need for vast computing resources as it reportedly struggles with supply shortages. The deal equates to an average annual expenditure of $60 billion for OpenAI, which currently revenues hover around $10 billion.

American tech giant Oracle appears to be placing substantial future revenue on this one customer, potentially necessitating additional financing for the required AI chips. This could mark a pivotal transition for OpenAI as it tries to reduce dependence on Microsoft amid frustration over supply chains.

As OpenAI seeks to enhance capabilities in AI, its CEO Sam Altman faces challenges from limited computing power that impede product rollouts. Analysts worry about OpenAI’s $44 billion loss before it anticipates profitability by 2029.

In recent developments, Oracle, in collaboration with Crusoe, is exploring data center locations in states including Wyoming, Pennsylvania, Texas, Michigan, and New Mexico.