OpenAI signed one of the largest cloud contracts in history with Oracle. The creator of ChatGPT is buying a huge amount of computing power in a five-year contract worth a staggering $300 billion, scheduled to begin in 2027.
The amount of power is about 4.5 gigawatts. To put that in perspective, it is roughly the same amount of electricity produced by more than two Hoover Dams or enough to power about 4 million homes in the United States.
This computing power is for OpenAI’s “Stargate” project, which is a massive initiative to build AI data centres. Managing advanced AI models like ChatGPT requires an enormous amount of processing power, and this deal aims to secure that for OpenAI’s future growth.
Oracle’s stock surged by a significant amount, making its co-founder, Larry Ellison, one of the richest people in the world. It also shows that Oracle is a serious competitor in the cloud computing market against the big players like Amazon Web Services (AWS) and Microsoft Azure.
Safra Catz, CEO of Oracle, confirmed that the company had signed “four multi-billion-dollar contracts” with three different customers in the last quarter, which fuelled a massive increase in Oracle’s future contract revenue.
The deal is a massive bet on the future for OpenAI. The $300 billion commitment is far more than the company’s current annual revenue. OpenAI is not yet profitable, so this deal highlights its confidence that its technology and services will grow in value and demand significantly over the coming years.
OpenAI has also stated that the partnership will “create new jobs, accelerate America’s reindustrialisation, and help advance U.S. AI leadership.”
Oracle is an American company specialising in enterprise software, cloud computing, and hardware. It has become one of the world’s largest software companies.
