Why Oracle’s $300B AI Deal with OpenAI Could Reshape the Cloud Landscape

Oracle’s stock jumped dramatically after the U.S. market opened, with the company’s share price soaring 43% intraday and closing up nearly 36%, briefly making founder Larry Ellison the world’s richest person.

Ellison’s net worth surged by $1 trillion in a single night, briefly surpassing Elon Musk.

The surge was not driven by Oracle’s traditional database business but by a massive AI‑related contract with OpenAI.

Oracle disclosed a $300 billion, five‑year compute‑power procurement agreement with OpenAI, one of the largest cloud‑computing contracts ever.

The deal is slated to become effective in 2027, with OpenAI planning to pay roughly $600 billion per year over five years.

“Stargate” Plan Component

Oracle previously hinted at the agreement in a June document, describing a cloud‑service deal that will generate over $30 billion in annual revenue starting in 2027.

The contract is a high‑risk gamble for both companies. OpenAI would pay $600 billion annually, far exceeding its current $100 billion yearly revenue.

OpenAI is projected to lose $440 billion by 2029 before achieving profitability.

The feasibility of the deal relies on continued explosive growth of ChatGPT and widespread enterprise adoption.

OpenAI also launched the “Stargate” data‑center project with SoftBank, aiming to build multiple U.S. data centers and becoming the largest AI infrastructure initiative ever.

Betting on AI Infrastructure

Following the contract, Oracle will heavily depend on a single customer and may need to incur debt to fund AI‑chip purchases for new data centers.

Oracle plans to partner with Crusoe and other data‑center builders to establish facilities in Wyoming, Pennsylvania, Texas, and elsewhere, requiring about 4.5 GW of power—equivalent to the output of two Hoover Dams.

Compared with peers like Microsoft, Amazon, and Meta, Oracle’s debt‑to‑equity ratio is dramatically higher (427% vs. Microsoft’s 32.7%).

In the last fiscal year, Microsoft’s operating cash flow was $136 billion with $88 billion capital expenditures, while Oracle’s operating cash flow was $21.5 billion against $27.4 billion capex.

Industry analysts forecast that global spending on chips, servers, and data‑center infrastructure will reach $2.9 trillion by 2028, far outpacing most companies’ internal financing capacity and prompting many to turn to external debt markets.

One More Thing

Public attention also turned to Larry Ellison’s personal life, with speculation about how the 81‑year‑old maintains his vitality.