OpenAI agreed to pay Oracle $30B a year for data center services
OpenAI, the pioneering artificial intelligence company, has officially been identified as the client behind Oracle’s staggering $30 billion per year data center services deal, a revelation that sent ripples across the tech industry. While Oracle initially disclosed the unprecedented contract last month without naming the partner, The Wall Street Journal first reported OpenAI’s involvement. This was subsequently confirmed by OpenAI CEO Sam Altman, who acknowledged the specifics of the contract (though not the exact dollar amount) via an X post and a detailed company blog post.
The deal, first hinted at by Oracle in a June 30 SEC filing, caused a significant surge in Oracle’s stock, propelling its founder and CTO, Larry Ellison, to become the world’s second-richest individual, as reported by Bloomberg. The sheer scale of the $30 billion annual revenue figure had previously sparked widespread speculation within the tech community, given that Oracle’s collective cloud services revenue for its entire fiscal year 2025 stood at $24.5 billion, as they reported in June.
OpenAI’s confirmation clarifies that this monumental Oracle partnership is aimed at securing 4.5 gigawatts of data center capacity. This capacity is a crucial component of ‘Stargate,’ the ambitious $500 billion data-center-building project that OpenAI, Oracle, and SoftBank announced in January. To put this immense power requirement into perspective, 4.5 gigawatts is equivalent to the output of two Hoover Dams, capable of supplying electricity to approximately four million homes.
The primary location for this colossal undertaking is the ‘Stargate I’ site in Abilene, Texas. While this deal represents a significant win for Oracle, it also entails a substantial investment and operational challenge. The construction of such a massive data center will demand considerable financial resources and energy. Oracle’s CEO, Safra Catz, reported in June that Oracle spent $21.2 billion on capital expenditures in its last fiscal year and anticipates spending another $25 billion this year, totaling nearly $50 billion over two years largely directed towards data center infrastructure, though this also supports Oracle’s existing client base.
The financial commitment from OpenAI is particularly noteworthy when viewed against its own revenue growth. Sam Altman recently stated that OpenAI achieved $10 billion in annual recurring revenue, a substantial increase from about $5.5 billion last year. The $30 billion annual commitment to Oracle for data center services alone is three times OpenAI’s current annual revenue, underscoring the company’s aggressive expansion plans and its immense need for computing power to drive the next generation of AI innovation.
