Historic $300 billion deal from technology giants
A deal that will shift the balance of power in the tech world has been made. OpenAI, one of the world's leading companies in the field of artificial intelligence, has signed a five-year, $300 billion contract with cloud computing giant Oracle. The agreement highlights the record levels of global spending on AI data centers.
As part of the contract, Oracle will provide OpenAI with 4.5 gigawatts of computing capacity, equivalent to the electricity consumed by approximately four million households or the power generated by two Hoover Dams, according to the Wall Street Journal. The agreement aims to meet the massive energy and computing power OpenAI needs for its growing operations.
This development gave Oracle a significant advantage over rivals like Microsoft Azure, Amazon Web Services (AWS), and Google Cloud. The company's shares surged by as much as 43 percent after the deal was announced. Oracle Chairman Larry Ellison's wealth also increased by $100 billion in one day, reaching nearly $400 billion.
Artificial Intelligence Centers Will Consume Record EnergyThe 4.5 gigawatts of capacity Oracle will provide demonstrates how rapidly demand for AI infrastructure is increasing globally.
ORACLE SHARES SURGEThe sharp rise in the company's stock value revealed just how big Oracle's future earnings expectations are.
RISKY GAMBLE FOR OPENAIOpenAI, which generates approximately $10 billion in annual revenue, will reportedly pay an average of $60 billion annually under the agreement. Experts believe this will make it difficult for the company to turn a profit until at least 2029.
MICROSOFT MONOPOLY BROKEOpenAI has until now been dependent on Microsoft's infrastructure. However, the Oracle deal is shifting the balance of power in the AI market.
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