OpenAI, Oracle Strike Lease Deal to Generate 4.5 GW of Computing Power
Key Takeaways
- OpenAI and Oracle signed a $30 billion annual lease agreement to help the AI company produce 4.5 GW of computing power.
- While OpenAI is the clear leader in this early stage of the AI race, other companies like Oracle, AMD, and Nvidia might also find success.
- With its increasingly strained relationship with OpenAI, Microsoft could ultimately lose, despite being one of its early supporters.
Stargate AI-the US government's effort to lead in AI innovation-is a massive undertaking that will cost $500 billion and require 10 gigawatts (GW) of computing power nationwide.
Because of this, OpenAI recently announced a $30 billion annual deal with Oracle to generate an additional 4.5 GW of data center capacity in the US.
The company's CEO, Sam Altman, confirmed this in a post on X with progress photos of its site in Abilene, Texas.
To provide context for the computing power OpenAI aims to produce, 4.5 GW could potentially power the following:
- 4M households for one year
- 30K electric vehicles via high-speed charging
- Countries like Ireland, New Zealand, and Croatia
- 3 DeLorean time machines (we're still waiting on this one, though)
OpenAI also announced that parts of its Stargate I site in Abilene are now operational. According to its statement, Oracle has already begun delivering the first batch of Nvidia GB200 racks, which OpenAI has used for early training and inference tasks.
The 875-acre site, roughly the size of New York's Central Park, is just one of many data center infrastructures to be built across the US as part of the Stargate project.
Potential Winners in the AI Race
While OpenAI is probably the most visible player in the Stargate project, it's not the only potential winner as it moves forward. Here are a few others that could gain from this AI race.
- Oracle
Unlike companies like Google and Microsoft, Oracle doesn't have an LLM or plans to develop one. This positions the company well to accept more compute deals like its current agreement with OpenAI.
Additionally, its $30 billion annual deal with Sam Altman's company could further increase its revenue, which grew by 8% in its 2025 fiscal year.
Although seen as a direct competitor to OpenAI with its Gemini AI assistant, Google has shown it's willing to cooperate where there's mutual benefit.
Back in June, OpenAI used Google's cloud services to boost its computing capacity.
While the move surprised the market, it makes a lot of sense since Google has the infrastructure to support what OpenAI needs, as OpenAI aims to reduce its dependence on its partnership with Microsoft.
- AMD and Nvidia
OpenAI relies on both AMD and Nvidia chips, making them the hidden forces behind the growth of AI.
Staying in this position in the coming years will mainly depend on how effectively and affordably these companies can supply chips to meet OpenAI's high computing demands.
The prices of these companies' GPUs are rising, with AMD, for example, possibly increasing the price of its MI350 AI chip from $15K to $25K-a significant 70% jump.
This could motivate OpenAI to accelerate the development of its first in-house chip to reduce costs. Once released, these chips are expected to mainly be used for running AI models at first.
- The US
Beyond positioning the country as an AI leader, the project could also create many jobs, especially in its initial stages.
While managing data centers usually doesn't need much manpower, constructing them does.
According to OpenAI, this could generate over 10K jobs, including direct roles like short-term construction jobs and indirect positions in manufacturing and local services.
- SoftBank
After a series of failed investments in companies like WeWork and Katerra, Japanese firm Softbank might finally succeed with OpenAI.
The company's CEO, Masayoshi Son, stated in June that SoftBank is fully committed to OpenAI. Overall, it plans to invest slightly over $30 billion in the company behind ChatGPT.
Currently, the two companies are leading the Stargate AI project. This could open the door to bigger opportunities, provided they agree on where to place their data centers first.
Who Could Lose in This Race
Where there are winners, there are also losers, as OpenAI's success could mean the opposite for the following:
- Microsoft
With approximately $14 billion invested in OpenAI, Microsoft's partnership with the AI leader has faced turbulence in recent years.
This issue is further complicated by each company's definition of artificial general intelligence (AGI), or a level of AI that surpasses human intelligence.
Once OpenAI achieves AGI, Microsoft will lose access to its advanced technology under its current contract. However, the two are reportedly discussing a resolution to the complicated clause.
- The Environment
AI infrastructure consumes many resources. From chips that need rare earth elements to generating more e-waste and using large amounts of water for cooling components, all these factors have a cumulative impact on the environment.
Although it's too early to determine AI's actual impact on the planet, the UN Environment Programme recommends developing more efficient AI algorithms to lower energy consumption and using renewable energy for data centers, among other measures.
It's Off to the Races with OpenAI and Oracle's New DealOpenAI's deal with Oracle to generate an additional 4.5 GW of computing power marks an exciting new chapter in AI's rise. This should enhance the capabilities of the Sam Altman-led company while bringing the ambitious Stargate project to life.
It's not just OpenAI's story, though, as companies like AMD, Nvidia, Softbank, and Microsoft will also play important roles in the coming years.
Then there's the environmental impact of this technology as well. This deserves closer examination if companies are genuinely committed to developing AI that benefits humanity.
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