OpenAI-Oracle agreement, 300 billion investment in computing power in 5 years

OpenAI has signed a contract with Oracle to purchase $300 billion in computing power over about five years, a huge commitment that far exceeds the start-up's current revenue, writes the Wall Street Journal. It is one of the largest cloud contracts ever signed, demonstrating how spending on AI data centres is reaching new highs despite growing fears of a potential bubble. The contract with Oracle will require 4.5 gigawatts of energy capacity, roughly comparable to the electricity produced by more than 2 Hoover Dams or the amount consumed by about 4 million people.

Yesterday, Oracle made an incredible surge on the stock exchange, realising gains of up to 40 per cent, taking its capitalisation from USD 678 billion to USD 943 billion, and sending co-founder Larry Ellison's fortune soaring to USD 393 billion, surpassing Elon Musk (standing at USD 383 billion).

The boost came from the quarterly accounts and, above all, from the wave of contracts related to artificial intelligence. Presenting the accounts, CEO Safra Catz spoke of an 'extraordinary quarter', with four multi-billion dollar contracts signed in three months and bookings rising to USD 455 billion, well above the previous period's USD 138 billion and market expectations.

A growth made possible by the hunger for the cloud infrastructure needed to train and operate the new AI models, which also points to a new factor: after chips (which have made Nvidia the most valuable company in the world), it is now the cloud that is the other eldorado produced by the artificial intelligence boom.

News had already leaked out in July of a possible maxi-agreement with OpenAI for 4.5 gigawatts of computing power, but the figure signed between the two companies and reported by the Wall Street Journal is double what was anticipated then.