[NEW YORK] OpenAI has agreed to rent a massive amount of computing power from Oracle data centres as part of its Stargate initiative, underscoring the intense requirements for cutting-edge artificial intelligence (AI) products.
The AI company will rent additional capacity from Oracle, totalling about 4.5 gigawatts of data centre power in the US, according to sources familiar with the work who asked not to be named, discussing private information.
That is an unprecedented sum of energy that could power millions of American homes. A gigawatt is akin to the capacity from one nuclear reactor and can provide electricity to roughly 750,000 houses.
Earlier this week, Oracle announced that it had signed a single cloud deal worth US$30 billion in annual revenue beginning in fiscal 2028 without naming the customer. This Stargate agreement makes up at least part of that disclosed contract, according to one of the sources.
Stargate – OpenAI’s project with partners including Oracle and SoftBank Group to invest US$500 billion in AI infrastructure – was first announced in January at the White House. So far, Oracle has developed a massive data centre in Abilene, Texas, for OpenAI alongside development partner Crusoe.
To meet the additional demand from OpenAI, Oracle will develop multiple data centres across the US with partners, the sources said. Sites in states including Texas, Michigan, Wisconsin and Wyoming are under consideration, in addition to expanding the Abilene site from a current power capacity of 1.2 gigawatts to about two gigawatts, they said. OpenAI is also considering sites in New Mexico, Georgia, Ohio and Pennsylvania, one of the sources said.
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These new projects will be part of Stargate, and details of the plans may still change, according to a source familiar with the plans. OpenAI and Crusoe declined to comment on the plans. Oracle did not return a request for comment.
Oracle shares climbed following the news and closed up 5 per cent to US$229.98, a record high. The stock has jumped 38 per cent this year, fuelled by investor enthusiasm for its cloud business.
Oracle, known for its database software, has gained traction in the market for renting out computing power and storage over the Internet, in part by targeting clients focused on AI work. This has led to a jump in revenue and expenses. The US$30 billion deal is more than the current size of its entire cloud infrastructure business.
Credit ratings firm S&P wrote on Wednesday (Jul 2) that Oracle’s cloud infrastructure building spree was straining cash flow and that the current spending pace is higher than anticipated. Still, it viewed Oracle’s cloud strategy favourably over the long term.
OpenAI said in May it was helping develop a Stargate project in the United Arab Emirates with Oracle, Crusoe, AI chipmaker Nvidia, Cisco Systems and G42, an AI company backed by the country’s sovereign wealth fund. BLOOMBERG
