Oracle has secured a $300 billion contract with OpenAI to underpin the company\u2019s surging compute requirements, marking the latest big win for the hyperscaler.<\/p>\n
According to reports from the Wall Street Journal<\/a>, the contract is set to commence in 2027 and will see Oracle expand the underlying infrastructure required to power OpenAI models.<\/p>\n <\/p>\n This marks the latest in a string of deals struck by OpenAI to support future expansion as the firm scrambles to match skyrocketing power demands.<\/p>\n Compute power has been frequently identified as a key bottleneck for the company as it ramps up AI development.<\/p>\n Microsoft, OpenAI\u2019s long-term partner and financial backer, has been a key player in supporting the firm through its Azure cloud computing service. But with reports of strained relations between Microsoft and OpenAI<\/a> gaining traction in recent months, the latter has been looking elsewhere for industry support.<\/p>\n In June 2024, a deal between Oracle, Microsoft, OpenAI was announced to provide the latter with \u201cadditional capacity\u201d. At the time, the company said this was to support \u201cinference and other needs\u201d.<\/p>\n Notably, the deal marked a huge shift away from Microsoft, which until that point had been OpenAI’s exclusive cloud provider.<\/p>\n Similarly, earlier this year OpenAI and Oracle agreed to partner on the Stargate Project<\/a>, a $500 billion initiative aimed at building out AI infrastructure across the United States.<\/p>\n Oracle is capitalizing on AI<\/p>\n Oracle is fast emerging as one of the big winners from the increasingly frantic generative AI<\/a> race.<\/p>\n In its most recent earnings report, the company revealed it added upwards of \u00a3317 billion in future contract revenue, with OpenAI responsible for a huge chunk of this.<\/p>\n Shares surged following the earnings report and Larry Ellison\u2019s personal wealth skyrocketed.<\/p>\n Elsewhere, the company has made significant gains in areas such as multi-cloud<\/a>, again driven by surging AI demands. Enterprises globally are shifting to a hybrid or multi-cloud approach as a result of the generative AI race, and it\u2019s a trend that Oracle has been keen to capitalize on.<\/p>\n At the Oracle CloudWorld Tour London conference in March this year, the hyperscaler announced an expansion of its multi-cloud relationship with Azure.<\/p>\n This followed confirmation of a similar partnership with AWS at its annual conference in Las Vegas<\/a> just months prior.<\/p>\n High stakes for OpenAI<\/p>\n OpenAI\u2019s blossoming relationship with Oracle doesn\u2019t come without risk, however.<\/p>\n As sources told the WSJ, this is a deal that \u201cfar outstrips\u201d the company\u2019s current revenue, which is reported to stand at around $10 billion.<\/p>\n Under the terms of the agreement, OpenAI will essentially owe Oracle an average of $60 billion a year.<\/p>\n The deal also rests heavily on whether OpenAI\u2019s current growth trajectory continues as it looks to draw more customers across both the enterprise and consumer markets.<\/p>\n Make sure to follow ITPro on Google News<\/a> to keep tabs on all our latest news, analysis, and reviews.<\/p>\n