OpenAI has committed to paying $30 billion annually for data center services in a landmark deal, highlighting the growing demands of AI enterprises for extensive computing power and infrastructure.
Why it matters: This massive contract solidifies Oracle’s position as a leading provider of data center services and showcases the escalating infrastructure demands of burgeoning AI technologies.
The details:
- The agreement necessitates the construction of a facility known as Stargate, with a capacity of 4.5 gigawatts, comparable to the energy output of two Hoover Dams.
- The data center will be located in Abilene, Texas, and is set to become one of the world’s most powerful computing hubs.
- OpenAI’s annual recurring revenue has surged to around $15 billion, up from approximately $5.5 billion last year, with this deal alone tripling its previous yearly revenue.
However, the Stargate AI project has faced challenges due to disagreements between OpenAI CEO Sam Altman and SoftBank founder Masayoshi Son, leading to a substantial scale-back of its original scope.
What they’re saying:
- Elon Musk has consistently questioned the venture’s financial backing, stating, “They simply don’t have the funding.”
- Arm Holdings CEO Rene Haas highlighted Arm’s increasing presence in data center deployments, driven by collaborations with OpenAI, Oracle, and SoftBank.
OpenAI is also seeking additional capital from investors as part of its $40 billion round, which brought the company’s valuation up to $300 billion.
The background: OpenAI has raised a total of $63.92 billion since its founding in 2015, with backers including Microsoft, Andreessen Horowitz, Sequoia Capital, and Nvidia.
What’s next: OpenAI has proposed a new structure that keeps the nonprofit in control of the company and turns its current for-profit subsidiary into a public benefit corporation, with one investment contingent on this new structure being approved by early next year.
Recent from X
It's official: we're developing 4.5 gigawatts of additional Stargate data center capacity with Oracle in the U.S (for a total of 5+ GWs!).
And our Stargate I site in Abilene, TX is starting to come online to power our next-generation AI research. https://t.co/EY2qcj2yNE
— OpenAI (@OpenAI) July 22, 2025
we have signed a deal for an additional 4.5 gigawatts of capacity with oracle as part of stargate. easy to throw around numbers, but this is a _gigantic_ infrastructure project.
some progress photos from abilene: pic.twitter.com/JfutuoYvn9
— Sam Altman (@sama) July 22, 2025
OpenAI and Oracle entered an agreement to develop 4.5 gigawatts of additional Stargate data center capacity bringing total capacity under development to over 5 gigawatts running over 2 million chips, significantly advancing progress toward their $500 billion commitment announced… pic.twitter.com/kTHijYjq73
— Tibor Blaho (@btibor91) July 22, 2025
More news on the expansive data center growth – OpenAI $ORCL https://t.co/htJ64W7y4G
— Stephanie Link (@Stephanie_Link) July 22, 2025