OpenAI has made headlines recently with their reportedly $30 billion annual contract with Oracle. We here at OpenAI are celebrating our own milestone—$10 billion in ARR. This accomplishment almost doubles last year’s record revenue of about $5.5 billion. OpenAI’s CEO, Sam Altman, formally announced the specifics of this game-changing agreement via X. To further address large shareholders’ concerns, he posted a detailed, line-by-line explanation on the company’s website.
The contract represents a deepening of strategic partnership between the two tech giants, as OpenAI looks to further scale its operations. Over the past two years, OpenAI has spent nearly $50 billion, primarily on data centers, to support its growing demand for computational power and storage. Importantly, this amount does not include the cost of any land that might need to be purchased for future expansions either.
In keeping with this trend, OpenAI is indeed building the Stargate I facility in Abilene, Texas. For instance, this facility will be integral in addressing the massive infrastructure needs that OpenAI’s expansive workload is going to require. The company requires a staggering 5 gigawatts of power—equivalent to the output of two Hoover Dams—enough energy to supply approximately four million homes.
The fiscal impact of this partnership goes well beyond the initial contract year. Just on June 30, Oracle disclosed the size of their cloud deal in an SEC filing. They further emphasized that the partnership with OpenAI will lead to a new revenue stream of $30 billion annually. Even so, this deal shores up Oracle’s position in the rapidly growing cloud services market. It gives OpenAI the opportunity to further entrench its dominance in artificial intelligence and machine learning.
The Wall Street Journal was first to report the specifics of the agreement, calling it an unprecedented accord in the world of high tech. OpenAI has been learning, iterating, and improving at a rapid pace. Collaborations such as this new partnership with Oracle are indicative of the state’s potential to continue its growth trajectory.
