OpenAI Confirms Massive $30 Billion Annual Deal with Oracle for Data Center Services

OpenAI has confirmed a monumental $30 billion per year deal with Oracle for data center services, as reported by The Wall Street Journal on Monday. CEO Sam Altman acknowledged the specifics of the contract in a recent post on X, though he did not disclose the dollar amount, and detailed the agreement in a company blog post. On June 30, Oracle made a significant announcement in an SEC filing, revealing a cloud service deal that would bring in $30 billion annually in revenue. However, the filing did not reveal the identity of the partner or the nature of the services involved. This vague disclosure sent Oracle’s stock soaring to an all-time high, propelling its founder and CTO, Larry Ellison, to second place on Bloomberg's list of the world's richest individuals. The speculation surrounding the deal's recipient was intense, as it was hard to imagine any company requiring such a massive amount of data center resources. For context, Oracle's total cloud services revenue for the fiscal year 2025 was $24.5 billion, encompassing all of its clients combined. OpenAI has now clarified that the deal is part of a broader initiative called Stargate, a $500 billion project announced in January involving Oracle and SoftBank. OpenAI's contract with Oracle specifically secures 4.5 gigawatts of capacity, which is equivalent to the output of two Hoover Dams—enough power to supply roughly four million homes. This agreement signifies a massive leap in OpenAI’s infrastructure needs, reflecting the company's ambitious goals in developing advanced AI models. However, the deal is not just a simple transaction; it involves a significant joint venture to construct the data center, which will undoubtedly require substantial financial and energy investments. The data center, known as Stargate I, is set to be built in Abilene, Texas. Oracle committed to capital expenditures of $21.2 billion in the last fiscal year and expects to spend an additional $25 billion this year, totaling nearly $50 billion over two years. While these figures cover both existing and new projects, they underscore the scale of the investment required to support OpenAI's demanding requirements. Adding to the complexity, Altman recently revealed that OpenAI has achieved $10 billion in annual recurring revenue, a significant jump from $5.5 billion last year. The Oracle deal, valued at three times this current revenue, highlights the company’s rapid expansion and the financial stakes involved in the AI arms race. Despite the financial implications, the partnership is seen as a strategic move for both companies. Oracle gains a major client with deep pockets and cutting-edge AI applications, while OpenAI secures the computing power needed to stay at the forefront of AI innovation. The construction and operational challenges, however, will be formidable, and both parties must navigate them carefully to see the project through to completion.