OpenAI inks monumental $300 billion cloud deal with Oracle

One of the largest cloud contracts in history has been signed between OpenAI and Oracle.

The American artificial intelligence (AI) company has signed a staggering $300 billion agreement with Oracle, underscoring ever-increasing computational demands of the artificial intelligence industry.

The highly significant deal will last for five years, starting in 2027, and is a core component of the ambitious “Stargate” AI infrastructure project.

The deal initially reported by The Wall Street Journal, will involve OpenAI purchasing large quantities of compute on the Oracle cloud platform. 

To buttress this, the companies intend to construct new data centers with huge capacity of 4.5 gigawatts (a capacity of power that can serve millions of households.)

This is a strategic masterstroke for both businesses.

In the case of OpenAI, which has had to endure severe computing constraints that limit the implementation of its products, it can afford the unprecedented scale required to train and execute future generations of AI models.

It also lessens its dependence on a single chip vendor, as it has a separate initiative of $10 billion with Broadcom to create custom AI chips.

To Oracle, the agreement is a resounding affirmation of its cloud business. The company has recently announced a 77% year-over-year cloud infrastructure revenue growth, and this acquisition is an important part of the reported future contract backlog of over $317 billion.

It solidly positions Oracle as a player in infrastructure arms race of the AI game.

The magnitude of the investment is an indicator that OpenAI is placing a big bet on a booming demand for its AI services worldwide.