OpenAI and Oracle Announce Landmark $3 Billion Data Center Partnership

In a move that reshapes the AI infrastructure landscape, OpenAI has entered into a monumental agreement with Oracle for data center services worth approximately $3 billion annually. The deal, first reported by The Wall Street Journal, represents one of the largest cloud service contracts in tech history.

The Scale of the Agreement

The partnership's sheer magnitude becomes clear when compared to Oracle's existing business: the company generated $24.5 billion in total cloud services revenue across all customers in fiscal year 2025. This single contract with OpenAI could account for over 12% of that figure.

Oracle had hinted at this massive deal in a June 30 SEC filing, mentioning an undisclosed cloud services agreement expected to generate $30 billion in annual revenue. The announcement sent Oracle's stock soaring, briefly making founder Larry Ellison the world's second-richest person.

Powering the AI Revolution

The agreement forms part of the ambitious "Stargate" project - a $50 billion data center initiative involving OpenAI, Oracle, and SoftBank. Key details include:

• 4.5 gigawatts of power capacity (equivalent to two Hoover Dams)
• Capacity to power approximately 400,000 homes
• New data center construction in Abilene, Texas

Financial Implications

The deal comes as OpenAI reveals its annual recurring revenue has reached $10 billion, up from $5.5 billion last year. Notably:

• The Oracle commitment represents three times current income
• Excludes fees for existing data centers
• Positions OpenAI for next-generation AI model training

For Oracle, achieving this scale presents challenges. CEO Safra Catz disclosed:

• $21.2B spent on capital expenditures last fiscal year
• Projected $25B investment this year
• Nearly $50B total data center investment over two years

Key Points:

1. Historic Deal: $3B annual contract between OpenAI and Oracle for data center services
2. Massive Scale: Part of $50B "Stargate" project with 4.5GW power capacity
3. Market Impact: Could triple OpenAI's revenue while boosting Oracle's cloud position
4. Infrastructure Challenge: Requires building new Texas data center with enormous power needs
5. Financial Commitment: Oracle investing nearly $50B over two years in data centers