OpenAI Agreed to Pay Oracle $30 Billion a Year for Data Center Services, Says Sam Altman

SAN FRANCISCO, July 25, 2025 — More clarity has surfaced on the $30 billion-per-year deal signed between OpenAI and Oracle last month for data center services.

Several weeks after the deal, finer details of the contract have come to the fore.

OpenAI CEO Sam Altman has issued a confirmation regarding the details of the contract in an X post and in a company blog post. However, Sam has not revealed the dollar amount concerning the contract.

To recollect, on June 30, Oracle made a disclosure in an SEC filing that it had signed a cloud deal with the ChatGPT maker that would generate $30 billion a year in revenue.

However, the tech giant kept under wraps the name of the partner with which it had struck the deal. Oracle has also remained silent on the kind of services which the deal was meant for.

As soon as the news of Oracle’s deal became public, it caused the company’s stock to hit an all-time high, making its founder and CTO, Larry Ellison, the second-richest person in the world, according to Bloomberg.

Oracle Kept Industry Guessing

The guessing game regarding the identity of Oracle’s customer continued, even as industry watchers were left puzzled about what the company could possibly need a fresh $30 billion a year in data center services for.

For comparison, Oracle collectively sold $24.5 billion worth of cloud services in its fiscal 2025 to all customers combined, it reported in June.

Giving more clarity on the deal, OpenAI has now said in detail that this Oracle deal is for 4.5 gigawatts of capacity as part of Stargate, the $500 billion data-center-building project OpenAI, Oracle, and SoftBank announced in January. As reported by CNBC, the $30 billion deal does not involve SoftBank.

The deal is no low-hanging fruit for Oracle. Oracle and OpenAI have a humongous task to build this mega data center, which will be a costly affair, both in cash and in energy. The tech firms are carrying out this exercise at what OpenAI called the Stargate I site in Abilene, Texas.

Meanwhile, in terms of spending on capital expenditures in its last fiscal year, Oracle spent $21.2 billion, CEO Safra Catz reported in June. The company expects to spend another $25 billion this year, she said.

The takeaway here is that nearly $50 billion was largely spent on data centers in two years, which excludes land purchases. To be more specific, that money also supports Oracle’s existing customers in addition to OpenAI’s demands.

Interestingly, last month, Sam Altman, while discussing company earnings, said that OpenAI recently hit $10 billion in annual recurring revenue, up from around $5.5 billion last year. This single commitment to Oracle is already triple per year what it is currently bringing in and doesn’t include all of the company’s other expenses, including its current data center commitments.

Stock Movement and Stargate

Oracle has rallied almost 12 percent since the June 30 SEC disclosure regarding the deal with OpenAI. Analysts have projected the OpenAI deal as a major win for Oracle's effort to establish its cloud infrastructure business as a serious competitor to Amazon and Microsoft.

Notably, Oracle reported $10.3 billion in cloud infrastructure sales for its May-ended fiscal 2025.

However, earlier this week, Oracle stock fell after the Wall Street Journal reported that the Stargate project has "struggled to get off the ground" and could scale back its near-term plans.

Amid much fanfare, the Stargate project was announced in January at the White House. It vows investments of up to $500 billion over the next five years to build data centers to power AI systems. SoftBank, OpenAI, and Oracle are the initial partners.

However, Oracle stock analysts saw the Stargate development in a positive light for Oracle.

The key question is how Oracle will finance this significant data center buildout, Evercore ISI analyst Kirk Materne was quoted as having said.

Kirk expects Oracle will need to spend an additional $40 billion in capital expenditures through 2028 to support the $30 billion in new annual AI revenue for its Oracle Cloud Infrastructure business. That will likely require Oracle to raise debt, he added.

Despite a 3 percent pullback so far this week, Oracle stock has rallied 46 percent this year. Last year, Oracle surged 60 percent to post the company's best share price growth performance since 1999.

OpenAI and Oracle are building the massive data center at what OpenAI called the Stargate I site in Abilene, Texas.

Inputs from Saqib Malik

Editing by David Ryder