Oracle, OpenAI expand Stargate deal to build more US data centres

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OpenAI has agreed to rent a massive amount of computing power from Oracle Corp. data centers as part of its Stargate initiative, underscoring the intense requirements for cutting-edge artificial intelligence products. 

The AI company will rent additional capacity from Oracle totaling about 4.5 gigawatts of data center power in the US, according to people familiar with the work who asked not to be named discussing private information. 

That is an unprecedented sum of energy that could power millions of American homes. A gigawatt is akin to the capacity from one nuclear reactor and can provide electricity to roughly 750,000 houses. 

Stargate — OpenAI’s project to buy computing power from Oracle for AI products — was first announced in January at the White House. So far, Oracle has developed a massive data center in Abilene, Texas, for OpenAI alongside development partner Crusoe.  

To meet the additional demand from OpenAI, Oracle will develop multiple data centers across the US with partners, the people said. Sites in states including Texas, Michigan, Wisconsin and Wyoming are under consideration, in addition to expanding the Abilene site from a current power capacity of 1.2 gigawatts to about 2 gigawatts, they said. OpenAI is also considering sites in New Mexico, Georgia, Ohio and Pennsylvania, one of the people said. 

These new projects will be part of Stargate, and details of the plans may still change, according to a person familiar with the plans. OpenAI and Crusoe declined to comment on the plans. Oracle didn’t return a request for comment. 

Oracle shares gained as much as 3.9 per cent to $227.46, a record high, following the news. The stock has jumped 36 per cent this year, fueled by investor enthusiasm in its cloud business. 

Earlier this week, Oracle announced that it had signed a single cloud deal worth $30 billion in annual revenue beginning in fiscal 2028 without naming the customer. This Stargate agreement makes up at least part of that disclosed contract, according to one of the people.  

Oracle, known for its database software, has gained traction in the market for renting out computing power and storage over the internet, in part by targeting clients focused on AI work. This has led to a jump in revenue and expenses. The $30 billion deal is more than the current size of its entire cloud infrastructure business. 

Credit ratings firm S&P wrote Wednesday that Oracle’s cloud infrastructure building spree was straining cash flow and that the current spending pace is higher than anticipated. Still, it viewed Oracle’s cloud strategy favorably over the long term. 

OpenAI said in May it was helping develop a Stargate project in the United Arab Emirates with Oracle, Crusoe, AI chipmaker Nvidia Corp, Cisco Systems Inc. and G42, an AI company backed by the country’s sovereign wealth fund.