Oracle Invests $40 Billion in Nvidia AI Chips for New OpenAI Data Center in Texas

Oracle has reportedly purchased around 400,000 Nvidia AI chips, valued at approximately $40 billion, for a new data center in Abilene, Texas. According to the Financial Times, this facility is set to be the first hub for the U.S. Stargate project, a massive $500 billion investment in AI infrastructure backed by OpenAI, Oracle, SoftBank, and the Abu Dhabi sovereign wealth fund MGX. This ambitious project was announced earlier this year by President Trump. Upon completion, the Abilene site is expected to deliver up to 1.2 gigawatts of computing power, placing it among the world’s most powerful data centers. This puts it in direct competition with Elon Musk’s Colossus data center in Memphis, Tennessee. The project’s ownership is somewhat intricate: the 875-acre site is co-owned by Cruso, an AI infrastructure company, and Blue Owl Capital, an investment firm. These companies have collectively invested over $15 billion in the site through debt and equity financing. Construction on the AI data center campus, which will consist of eight buildings, began in June of the previous year. Oracle has entered into a 15-year lease agreement to use the site, where it will deploy the Nvidia AI chips. Oracle will, in turn, lease this substantial computing power to OpenAI, enabling the organization to train its next-generation large language models (LLMs). OpenAI has traditionally depended on Microsoft’s data centers for its computational needs. However, the demand from OpenAI exceeded Microsoft’s supply capabilities, leading to frustration. As a result, the two organizations terminated their exclusive contract, allowing OpenAI to explore partnerships with other entities to meet its increasing processing demands. In another noteworthy development, OpenAI recently announced the Stargate UAE project, where it plans to deploy a 5 gigawatt data center in Abu Dhabi. This facility, which will use over 2 million Nvidia GB200 chips, will be constructed by G42 and is part of a broader strategic initiative involving the U.S. government. The surge in demand for AI data centers has significantly boosted Nvidia’s market value. In late 2024, Team Green reclaimed the top spot as one of the world's most valuable companies. Beyond the $40 billion Oracle order, there are reports that Elon Musk is raising funds to build Colossus 2, which will feature one million GPUs. This trend is not unique to major tech giants; various governments are also ramping up their investments in AI, thereby driving unprecedented demand for cutting-edge AI chips. To stay informed about the latest developments in technology, including such significant news and breakthroughs, follow Tom's Hardware on Google News. Click the Follow button to receive updates directly in your feed.