OpenAI revealed as the source of a newly signed $30 billion a year cloud contract for Oracle
Multiple news outlets have confirmed that the eye-popping, $30 billion-a-year contract that Oracle revealed earlier this week is with artificial intelligence company OpenAI.
It was already known that the two companies would be working on a number of massive data center projects together, including the Stargate projects in Texas and the UAE as part of an expansion of the model around the globe. But the implications for Oracle’s bottom line were not yet clear, until this week.
Financial Times received confirmation from people with knowledge of the arrangement who said that the Oracle deal involved OpenAI and Stargate in particular, and that additional states being considered for more data centers include areas in the Midwest and West, including Michigan, Wisconsin, New Mexico and Wyoming, among others. Data Center Dynamics has reported that OpenAI will be leasing about 4.5 GW of capacity from Oracle. Bloomberg reported that the deal includes a potential U.S. expansion of the existing Abilene, Texas, data center campus up to 2 GW.
The OpenAI data center leasing contract isn’t expected to hit Oracle’s books until 2028.
In the meantime, Oracle’s rapid growth is being driven by an extensive pipeline of other customers waiting for compute capacity —more demand than the company can keep pace with. CEO Safra Catz said recently that Oracle’s pipeline of committed projects is expected to grow by more than 100% in fiscal 2026. “This is a situation that we have not seen in our history,” she said. “And the numbers themselves are so enormous.”
Chairman and CTO Larry Ellison added that if the Stargate data center project turns out as advertised, then Oracle will have understated its pipeline growth.
OpenAI is targeting up to 10 global Stargate projects, with only two countries so far signed on.
It was just a few weeks ago that Oracle highlighted its MultiCloud growth rate and indicated a series of high and accelerating growth numbers, including that its pipeline of committed projects pipeline had grown 41% during the most recent quarter to $138 billion. Catz expressed confidence that Oracle Cloud Infrastructure (OCI) revenues would grow 70% in the coming year.
Ellison promised: “Oracle will be the number one cloud database company. Oracle will be the number one cloud applications company, and Oracle will be the number one builder and operator of cloud infrastructure data centers. We will build and operate more cloud infrastructure data centers than all of our cloud infrastructure competitors combined.”
Meeting that demand with data center infrastructure means substantial capital expenditures. Oracle estimated as it works to meet demand from its backlog, it will spend $25 billion next year in capex — and maybe more. Catz said that the $25 billion figure “may turn out to be understated.” The “vast majority” of those capex investments are not for data center land or buildings, but for revenue-generating equipment, she added.
“We are putting out as much capacity as we possibly can as quickly as we can. … It is all to meet demand,” Catz said. “We don’t build unless we’ve got orders for our capacity to be built out.” Ellison further clarified that with its capex spend, Oracle is “filling out” data centers and buying components for its compute hardware. (Of note: Both executives said that they have had no issues getting enough GPUs.)
Ellison said that the company is making large investments in engineering and high-speed networking—already considered one of its competitive “strong suits” by research company SemiAnalysis—to reduce its capex costs. But, he added, “Capex is going to go up because the demand right now seems almost insatiable. I mean, I don’t know how to describe it. I’ve never seen anything remotely like this. … People are calling up and asking us, ‘Please, can you find us more capacity? We’ll take it wherever. It’s in Malaysia? We’ll take it, fine.’”
As the company brings more data center capacity online, it expects revenues and profits to grow even faster. For Oracle’s fiscal year 2025, cloud infrastructure revenue was up 51% to $10.2 billion. That is expects to increase more than 70% in fiscal 2026.
“Oracle is well on its way to being not only the world’s largest cloud application company, but also one of the world’s largest cloud infrastructure companies,” Catz said.
