OpenAI has signed one of the largest cloud computing contracts in history, agreeing to purchase $300 billion in Oracle computing capacity over roughly five years, according to people familiar with the matter. The deal begins in 2027 and is tied to the company’s urgent need for more compute power to run and train advanced AI models.

The scale is extraordinary: the agreement requires 4.5 gigawatts of electricity capacity, roughly equivalent to the energy produced by two Hoover Dams or consumed by four million U.S. households.

Oracle revealed in its latest quarterly report that it had added $317 billion in future revenue commitments, sparking a 43% surge in its stock price. That increase boosted Oracle Chairman Larry Ellison’s net worth by $100 billion, placing him in the same wealth range as Elon Musk.

The contract is not without risk. OpenAI generates around $10 billion in annual revenue, far below the $60 billion per year it must spend on the Oracle deal. OpenAI has told investors it does not expect to become profitable until 2029 and may lose $44 billion before then, according to The Wall Street Journal.

On the other side, Oracle is concentrating a massive portion of its future revenue on a single customer while already carrying a heavy debt load compared to peers like Microsoft and Amazon. To meet demand, Oracle will likely need to take on more debt to purchase AI chips and build data centers.

Analysts expect global investment in AI infrastructure — from chips to servers and full-scale data centers — to reach $2.9 trillion by 2028, according to Morgan Stanley. To support this wave of construction, many technology companies are leaning on an expanding pool of external financing that some on Wall Street liken to a modern-day gold rush.

For OpenAI, the scale of its Oracle contract depends heavily on the belief that ChatGPT will maintain its momentum, reaching not just individual users but also large enterprises and government clients. While adoption so far has been extraordinary, the company is under pressure from a costly battle for AI talent, delicate talks with Microsoft, and ongoing regulatory reviews tied to its for-profit restructuring.

On the other side of the deal, Oracle is taking on more risk than its cloud rivals. Data from S&P Global Market Intelligence shows that its debt-to-equity ratio sits at 427%, compared with 32.7% for Microsoft. The company’s capital spending has already outpaced its cash flow, underscoring how aggressively it is betting on the AI boom relative to peers such as Amazon and Meta.

In terms of raw numbers, the gap is striking. For the fiscal year ending in June, Microsoft generated $136 billion in operating cash flow and spent $88 billion on capital expenditures. By contrast, Oracle produced $21.5 billion in cash flow over the 12 months ending in August, while its capital spending reached $27.4 billion, according to S&P Global Market Intelligence.

The contract is also tied to Stargate, OpenAI’s new data-center initiative backed by SoftBank. OpenAI considers the Oracle deal part of the broader Stargate project, which includes partnerships with builders such as Crusoe. Oracle will receive more yearly revenue from OpenAI as additional data centers come online, expanding the contract’s value over time. Planned facilities are being scouted in Wyoming, Pennsylvania, Texas, Michigan, and New Mexico.

For years, OpenAI relied exclusively on Microsoft Azure for compute. But with supply shortages constraining AI training and product rollouts, the company was recently allowed to seek other providers.

Q: What did OpenAI and Oracle agree to?
A: OpenAI signed a $300 billion, five-year contract to purchase cloud computing power from Oracle, starting in 2027.

Q: How much electricity does the deal require?
A: About 4.5 gigawatts, equivalent to two Hoover Dams or four million homes.

Q: How did this impact Oracle’s stock?
A: Oracle shares surged 43% in one day, adding $317 billion in future revenue commitments.

Q: Why is the deal risky for OpenAI?
A: OpenAI makes $10B annually, but the Oracle contract requires $60B per year, raising concerns about losses and debt.

Q: What is Stargate, and how is it connected?
A: Stargate is OpenAI’s data-center initiative with SoftBank. The Oracle deal is part of Stargate and involves new U.S. data centers.

The $300 billion OpenAI–Oracle agreement underscores a turning point in the AI industry, where access to infrastructure at massive scale is becoming as important as software breakthroughs. With computing shortages slowing innovation across the sector, this deal is designed to give OpenAI the power to train larger systems and deliver new products more reliably.

For Oracle, the contract is a bold play to challenge entrenched rivals like Microsoft and Amazon in cloud computing. If successful, it could vault Oracle into a far more influential role in the AI era. But the financial exposure is significant: the company is committing resources well beyond its current cash flow to serve a single client.

Ultimately, the deal highlights both opportunity and fragility. OpenAI is betting its future on demand for ChatGPT and enterprise AI adoption, while Oracle is wagering that the AI boom will outweigh its financial risks. If both bets pay off, this could accelerate the spread of AI into businesses and governments worldwide — and mark the beginning of a new era where mega-scale infrastructure deals define the competitive landscape.

Editor’s Note: This article was created by Alicia Shapiro, CMO of AiNews.com, with writing, image, and idea-generation support from ChatGPT, an AI assistant. However, the final perspective and editorial choices are solely Alicia Shapiroo’s. Special thanks to ChatGPT for assistance with research and editorial support in crafting this article.