OpenAI Agrees to Pay Oracle $3 Billion Annually for Data Center Services

OpenAI and Oracle have finalized a landmark agreement involving $30 billion annually in data center services, as recently disclosed. The Wall Street Journal confirmed this in its latest report, with OpenAI CEO Sam Altman subsequently verifying the contract's terms (though not revealing the exact sum) through a post on X and a dedicated blog article.

According to Oracle's SEC filing dated June 30, this cloud services contract will generate $30 billion in annual revenue. While the company withheld partner details and service specifics, the disclosure triggered historic highs for Oracle's stock, propelling founder Larry Ellison to second place on Bloomberg's wealth rankings.

Industry speculation intensified about which client would require $30 billion/year in data center infrastructure. For context, Oracle delivered $24.5 billion in cloud services to all clients in fiscal 2025. OpenAI clarified the partnership aims to secure 4.5 gigawatts of capacity for its Stargate project, a $50 billion data center initiative jointly announced with Oracle and SoftBank in January. Importantly, SoftBank's involvement is separate from this specific $30 billion agreement.

The WSJ estimated that 4.5 gigawatts equates to two Hoover Dams' output, sufficient to power 4 million households. However, constructing these facilities poses significant challenges for both companies. The Stargate I site in Abilene, Texas, will require substantial investment in both capital and energy resources.

Oracle's financial commitments underscore these challenges. CEO Safra Catz revealed $21.2 billion in capital expenditures for the previous fiscal year, with an additional $25 billion projected for 2025. This near $50 billion investment over two years (excluding land purchases) must also support Oracle's existing customer base while addressing OpenAI's new demands.

Notably, OpenAI's annual recurring revenue recently reached $10 billion, up from $5.5 billion in 2024. The Oracle agreement alone represents three times this amount, excluding other operational costs and existing data center commitments.