OpenAI has entered a landmark agreement with Oracle Corp. to acquire $300 billion in computing infrastructure over five years, a key part of its ambitious Project Stargate data center initiative. This monumental deal signifies one of the largest cloud contracts ever and showcases the rapid growth of AI investments in Silicon Valley. Together, OpenAI and Oracle aim to produce 4.5 gigawatts of data center capacity, equivalent to the energy consumption of around 4 million U.S. homes.
Despite OpenAI’s current annual revenue of $10 billion being significantly lower than its $60 billion yearly operational costs, the partnership is a bold gamble on the sustained rise of AI technologies like ChatGPT. Additionally, Oracle’s financial risk is high, given its considerable debt. The two companies also plan to establish a data center complex in the UAE, supported by investors, including SoftBank. This deal positions them against fierce competition from tech giants like Google and Microsoft, as they race to dominate the AI landscape.
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