OpenAI confirms massive Oracle deal to power $500B Stargate Project

OpenAI has officially confirmed that it is the mystery client behind a jaw-dropping $30 billion per year deal with Oracle for data center services.

The news, originally hinted at in a June SEC filing, was verified by CEO Sam Altman in a post on X and a company blog on Tuesday, although the exact dollar figure was not disclosed by OpenAI.

On June 30, Oracle revealed in an SEC filing that it secured a $30 billion annual cloud contract. The client was not named. The news pushed Oracle’s stock to record highs. It also made CTO Larry Ellison the second richest person in the world, according to Bloomberg.

The size of the deal sparked weeks of speculation. Oracle’s total cloud revenue for fiscal 2025 was $24.5 billion, making this single contract even more surprising.

Powering the Stargate Project

OpenAI has now revealed that the Oracle deal covers 4.5 gigawatts of capacity, part of the ambitious Stargate project. It is a $500 billion data center initiative announced in January in partnership with Oracle and SoftBank. However, OpenAI clarified that SoftBank is not involved in the $30B agreement.

To put it in perspective, 4.5 gigawatts equals the energy output of two Hoover Dams, enough to power around four million homes.

The mega data center will be built at the Stargate I site in Abilene, Texas. This marks a key milestone in OpenAI’s long-term infrastructure plans. But it’s not an instant win for Oracle. The infrastructure still needs to be built. It will be both costly and energy-intensive.

Oracle is already deep into data center investments. CEO Safra Catz reported that the company spent $21.2 billion on capital expenditures last year and plans to spend another $25 billion this year. These massive investments cover both existing customers and new demands from clients like OpenAI.

Importantly, the $50 billion doesn’t even account for land purchases.

Revenue vs. Risk

One striking aspect of the deal is its scale relative to OpenAI’s current earnings. Last month, Altman revealed that OpenAI had hit $10 billion in annual recurring revenue, up from $5.5 billion the year before. This means the Oracle commitment is three times OpenAI’s current revenue, and doesn’t even factor in other ongoing operational costs.

With this historic deal, OpenAI isn’t just securing computing power. It is setting the stage for a new era of AI infrastructure, while Oracle cements its place as a major force in the cloud services race.