According to a report from The Wall Street Journal, OpenAI has reached a $3 billion per year data center services agreement with Oracle. OpenAI's CEO Sam Altman confirmed the details of the contract on social media, but did not reveal the exact amount. This deal was first disclosed by Oracle in a U.S. Securities and Exchange Commission filing on June 30th. Although the client's name and specific service details were not revealed at the time, this news caused Oracle's stock to surge, reaching an all-time high, and the company's founder and CTO Larry Ellison briefly became the second-richest person in the world.
Image source note: The image is AI-generated, and the image licensing service provider is Midjourney.
After this deal was made, people around the world began to speculate which company needed such a massive data center service. According to Oracle's financial reports, the total cloud services sales for the company in fiscal year 2025 amounted to $24.5 billion. OpenAI later explained that this deal with Oracle involves 4.5 gigawatts of power capacity, which is part of the "Stargate" data center project announced by both parties in January, worth $50 billion. It is worth noting that the $3 billion contract does not include SoftBank of Japan.
The Wall Street Journal pointed out that 4.5 gigawatts of power capacity is equivalent to the output of two Hoover Dams, enough to provide electricity for about 4 million households. However, this is not a simple victory for Oracle. OpenAI and Oracle still need to jointly build this massive data center, which will be a costly and energy-intensive project. The construction site is located in Abilene, Texas.
Meanwhile, Oracle spent $21.2 billion on capital expenditures in the past fiscal year and is expected to spend another $25 billion this year. It can be seen that within just two years, Oracle's spending on data centers has approached $50 billion, and this figure does not include the cost of land purchases. It should be noted that this money is also used to support Oracle's existing customers' needs, not just to meet OpenAI's requirements.
Interestingly, Altman recently revealed that OpenAI's annual recurring revenue has reached $1 billion, a significant increase from last year's level of approximately $550 million. This contract with Oracle is more than three times OpenAI's current annual revenue, not including other expenses and commitments for existing data centers.
Key Points:
🌟 OpenAI has reached a $3 billion per year data center services agreement with Oracle, becoming a focus of attention.
⚡ The contract involves 4.5 gigawatts of power capacity, equivalent to the output of two Hoover Dams, sufficient to supply power to about 4 million households.
💰 Oracle has spent nearly $50 billion on data centers in the past two years, and this money also supports the needs of its existing customers.