OpenAI has reportedly signed a contract with Oracle to purchase roughly US$300 billion in computing power over the next five years, according to people familiar with the matter, a commitment that far exceeds the startup's current revenue and signals the surging demand for AI infrastructure.
According to the Wall Street Journal, the deal, one of the largest cloud contracts ever disclosed, will require 4.5GW of power capacity, roughly equivalent to the output of more than two Hoover Dams or the electricity consumed by about four million homes. It underscores how data center spending is reaching unprecedented levels even as concerns rise over a potential AI investment bubble.
Oracle hinted at the agreement in a June filing, noting a cloud services deal that could deliver more than US$30 billion in annual revenue starting in 2027. OpenAI confirmed the 4.5GW contract in July but did not disclose the total value.
The arrangement, set to begin in 2027, represents a high-stakes gamble for both parties. OpenAI, which disclosed generating roughly US$10 billion in annual run-rate revenue as of mid-2025, would be paying on average US$60 billion per year under the contract, far outstripping its current earnings. Meanwhile, Oracle is concentrating a substantial portion of its future revenue on a single client and may need to assume debt to procure the AI chips powering the massive data centers.
Oracle's latest quarterly results highlight the benefits of the AI boom. In the first quarter of fiscal 2026 (June 2025 to May 2026), the company signed multiple multi-billion-dollar contracts, driving its remaining performance obligations (RPO) up 359% year-over-year to US$455 billion. CEO Safra Catz noted that cloud infrastructure revenue is expected to grow 77% in FY26 to US$18 billion and could reach US$144 billion by FY30 as more data centers come online.
For OpenAI, the rapid revenue growth has been accompanied by equally rapid expenditures. The company reported US$1.6 billion in 2023, up from US$200 million in 2022, and annualized revenue reached roughly US$12 billion by July 2025. Yet, with escalating investments in AI infrastructure and research, OpenAI projects a cash burn of US$8 billion in 2025 and anticipates total losses of US$44 billion between 2023 and 2028, with annual deficits potentially hitting US$14 billion by 2026.
Article edited by Jack Wu
