Oracle just landed one of the biggest deals in tech history. The company signed a contract with OpenAI worth $300 billion over five years. This isn’t just another business deal. It’s the kind of agreement that makes people stop and wonder if the numbers are even real. For context, that’s more money than most countries spend on their entire military budgets.
The deal sent Oracle’s stock jumping more than 40 percent in a single day. Larry Ellison, Oracle’s founder, briefly became the richest person in the world because of how much the stock price went up. His personal fortune hit around $383 billion at one point before settling back down. That’s the kind of money that only exists in science fiction movies, except this time it’s actually happening.
Here’s what the deal includes. OpenAI will buy computing power from Oracle starting in 2027. They need this computing power to run their AI systems, which require massive amounts of electricity and hardware. The contract calls for 4.5 gigawatts of data centre capacity. To put that in perspective, that’s enough electricity to power about 4 million American homes. It’s roughly the same amount of power that two Hoover Dams produce. We’re talking about serious infrastructure here.
Oracle is betting big on this partnership. The company will need to build new data centres in states like Wyoming, Pennsylvania, Texas, Michigan, and New Mexico. These aren’t small buildings either. They’re massive campuses filled with thousands of computer chips running constantly. Oracle will have to spend somewhere around $100 billion just to build the infrastructure needed to meet OpenAI’s demands. That’s money they’ll probably have to borrow, which means taking on debt.
The interesting part is that OpenAI doesn’t actually make enough money yet to pay for this deal. The company brings in about $10 billion in annual revenue right now. But to pay Oracle $60 billion a year starting in 2027, they’ll need to increase their income by six times. That’s a huge jump in just a couple of years. Some people are wondering if OpenAI can actually pull this off or if they’re making promises they can’t keep.
OpenAI isn’t profitable yet. They’re losing billions of dollars every year despite the success of ChatGPT. CEO Sam Altman has told investors that the company won’t make a profit until 2029 at the earliest. In the meantime, they need to keep raising money from investors to stay afloat. The Oracle deal assumes that ChatGPT and other OpenAI products will keep growing so fast that they’ll eventually bring in the massive revenue needed to cover these costs.
For Oracle, this contract changes everything. The company used to be known mainly for database software and business applications. Now they’re positioning themselves as a major player in the cloud computing market alongside Amazon Web Services, Microsoft Azure, and Google Cloud. This one contract with OpenAI adds $317 billion to Oracle’s future revenue backlog. That’s a 359 percent increase in just one quarter. If everything goes according to plan, Oracle could be looking at around $1 trillion in cloud revenue by 2030.
The relationship between Oracle and OpenAI actually started back in 2024. OpenAI began using Oracle’s cloud services to supplement what they were getting from Microsoft Azure. Microsoft has been OpenAI’s main partner and biggest investor, putting billions of dollars into the company. But OpenAI wanted more computing power than Microsoft could provide on its own, so they turned to Oracle for help.
This deal is part of something called Project Stargate. That’s OpenAI’s plan to build huge data centres across the United States. The project was announced at the White House with President Trump, Larry Ellison, and Sam Altman all standing together. They talked about American leadership in AI and creating jobs. The message was clear that this is about more than just business. It’s being framed as a matter of national importance.
The contract raises questions about whether this is all sustainable. The AI industry is spending money at a rate that makes people nervous. Companies are pouring hundreds of billions of dollars into infrastructure, chips, and electricity without clear proof that they’ll ever make that money back. Some experts are comparing this to the dot-com bubble from the early 2000s when internet companies spent wildly and then crashed when the money ran out.
Ratings agencies like Moody’s have expressed concern about the financial risks involved. They’re worried about what they call counterparty risk. That’s a fancy way of saying one side might not be able to pay their bills. If OpenAI can’t come up with the money to pay Oracle, then Oracle will be stuck with billions of dollars in debt and data centres that aren’t being used. On the other hand, if Oracle can’t build the infrastructure fast enough, then OpenAI won’t get the computing power they need.
The electricity requirements alone are staggering. To run 4.5 gigawatts of computing power, Oracle needs to secure massive amounts of electricity. That’s not easy in a world where power grids are already struggling and climate concerns are making it harder to build new power plants. OpenAI’s CEO has been investing in energy companies that work on nuclear fusion and other future technologies, but those solutions aren’t ready yet. In the meantime, someone has to figure out where all this electricity will come from.
Oracle isn’t the only company racing to build AI infrastructure. Amazon, Microsoft, Google, and Meta are all planning to spend about $300 billion combined this year on their own data centres. Everyone is trying to grab as much computing power as possible before it runs out. The demand for advanced computer chips and data centre space is way higher than the supply. By locking in this deal with Oracle, OpenAI is making sure they won’t get left behind.
Some people in the tech industry think this deal is brilliant. They see it as OpenAI securing what they need to stay ahead of competitors like Google and Anthropic. By committing to Oracle long term, OpenAI gets guaranteed access to computing power at a time when everyone is competing for the same resources. It’s like signing a contract to buy oil before a shortage hits. You might pay more than you would today, but you know you’ll have what you need when things get tight.
Other people think the whole thing is risky and potentially disastrous. They point out that OpenAI is essentially promising to spend money they don’t have yet. The company is assuming that ChatGPT and whatever products they release next will be so successful that the money will just roll in. That’s a big assumption. What if people get tired of AI tools? What if competitors come up with better products? What if governments regulate AI in ways that hurt OpenAI’s business?
Oracle seems confident this will work out. CEO Safra Catz said during an earnings call that the company signed contracts with the “who’s who of AI” and that Oracle’s cloud infrastructure is designed specifically for the kind of heavy computing that AI requires. The company has been building what they call GPU superclusters. These are groups of powerful chips connected together that can handle the enormous calculations needed to train and run AI systems.
The deal also shows how dependent companies are becoming on each other. OpenAI needs Oracle for computing power. Oracle needs OpenAI for revenue. Microsoft is involved because they’ve invested billions in OpenAI and also rent computing power from Oracle. Everyone is tied together in ways that could cause problems if any one piece falls apart. If OpenAI goes under, Oracle is in trouble. If Oracle can’t deliver, OpenAI has to scramble to find alternatives.
Looking at the timeline, payments don’t start until 2027. That gives both companies about 18 months to get everything ready. Oracle has to build massive data centres and secure the electricity to power them. OpenAI has to grow its revenue and convince investors to keep funding them. A lot can happen in 18 months. The AI market could keep booming, or it could slow down. Economic conditions could change. New technologies could emerge. There are a lot of variables that neither company can control.
For people watching from the outside, this deal is fascinating because it reveals how the AI industry really works. It’s not just about building smart software. It’s about massive infrastructure, enormous amounts of electricity, billions of dollars in debt, and companies making bets on a future that hasn’t happened yet. The $300 billion Oracle deal with OpenAI is basically a statement that AI is worth whatever it costs. Whether that turns out to be true is something we’ll only know years from now.
Right now, Oracle is celebrating because its stock price went up and the company suddenly looks like a cloud computing giant. OpenAI is celebrating because they secured the computing power they need to keep growing. Investors are divided between thinking this is the deal of the century and worrying that it’s a house of cards waiting to collapse. Whatever happens next, this $300 billion agreement between Oracle and OpenAI is going to be studied and talked about for years. It’s either the smartest move in tech history or one of the biggest mistakes. Time will tell which one it turns out to be.
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