OpenAI to Pay Oracle $30B Annually for Data Center Services

OpenAI Confirms Massive Oracle Data Center Deal

Recent reports from The Wall Street Journal indicated a substantial agreement between OpenAI and Oracle, valued at $30 billion annually for data center services. Sam Altman, CEO of OpenAI, has since corroborated the contract's specifics via a post on X and a subsequent company blog entry.

Oracle's Initial Disclosure

Oracle initially revealed the cloud deal in an SEC filing on June 30th, projecting $30 billion in yearly revenue. However, the identity of the client and the nature of the services remained undisclosed at that time. This announcement spurred a significant increase in Oracle’s stock value.

Consequently, Larry Ellison, Oracle’s founder and CTO, ascended to become the second wealthiest individual globally, as per Bloomberg’s assessment.

Speculation and Context

Intense speculation followed regarding the customer behind this massive expenditure. Analysts questioned which organization would necessitate $30 billion annually in data center resources.

For perspective, Oracle’s total revenue from cloud services across all clients in fiscal year 2025 amounted to $24.5 billion.

Details of the Stargate Project

OpenAI has clarified that the agreement with Oracle centers around securing 4.5 gigawatts of capacity within the Stargate initiative. This $500 billion data-center-building project involves OpenAI, Oracle, and SoftBank, as announced in January.

It's important to note that SoftBank is not directly involved in the $30 billion portion of this deal.

Power Capacity and Infrastructure

The 4.5 gigawatts of power secured represents a considerable amount of energy. The Wall Street Journal equates this to the output of two Hoover Dams, sufficient to power approximately four million homes.

Challenges and Investment

This partnership isn’t without its challenges. The construction of this large-scale data center will require substantial financial investment and energy resources.

The project is currently underway at the Stargate I location in Abilene, Texas.

Oracle's Capital Expenditure

Oracle’s CEO, Safra Catz, reported a $21.2 billion capital expenditure in the previous fiscal year. The company anticipates spending another $25 billion this year.

This totals nearly $50 billion over two years, primarily allocated to data centers, excluding land acquisition costs. These investments support both existing Oracle customers and OpenAI’s requirements.

OpenAI's Revenue Growth

Interestingly, Altman recently stated that OpenAI’s annual recurring revenue has reached $10 billion, a significant increase from $5.5 billion the previous year.

The commitment to Oracle alone represents three times OpenAI’s current annual revenue, and doesn’t account for other operational expenses or existing data center commitments.