AsianFin -- Oracle Corporation on Wednesday was reported to clinch another massive cloud computing deal right after the software company projected gobsmacking growth guidance for its cloud business.
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OpenAI has signed a deal to purchase $300 billion worth of computing power from Oracle over roughly five years, marking one of the biggest cloud contracts ever signed, the Wall Street Journal reported, citing people familiar with the matter. The contract, starting in 2027, requires 4.5 gigawatts (GW) of power capacity, roughly comparable to the electricity amount consumed by about four million homes, per the report.
OpenAI less than three months ago announced it had entered an agreement with Oracle to develop 4.5GW of additional Stargate data center capacity in the U.S., marking an expansion of an already massive infrastructure project.
Stargate, announced by U.S. President Donald Trump shortly after his inauguartion in January, is a joint venture between OpenAI, Oracle and Softbank that aims to invest up to $500 billion in artificial intelligence (AI) infrastructure in the U.S. over the next four years. OpenAI on June 22 said the additional partnership with Oracle will bring the startup to over 5 GW of Stargate AI data center capacity under development, which will run over 2 million chips.
Though OpenAI in June didn’t disclose the size of its deal with Oracle, the Wall Street Journal report on Wednesday noted Oracle first hinted the deal in a filling in June it had clinched a cloud service agreement that will generate more than $30 billion annual revenue starting in 2027. It was said that a majority of new revenue Oracle described on Tuesday will come from the OpenAI deal.
Oracle Tuesday after the bell multi-billion-dollar contracts with several customers, outweighing the top and bottom line miss for its first quarter of the fiscal year 2026 ended August 31.
Revenue for the August quarter grew 12% year-over-year (YoY) to $14.93 billion, versus the Wall Street estimated $15.03 billion polled by LSEG. Earnings per share (EPS) of $1.47 fell short of expected $1.48. However, Remaining Performance Obligations (RPO), a measure of contracted revenue that has not yet been recognized, soared 359% YoY to $455 billion.
“This is a very historic kind of print right here from Oracle with this backlog,” Ben Reitzes, technology research head at Melius Research told CNBC late Tuesday. “The Street was looking for about $180 billion in RPO and they’re talking about a number that is a multiple of that. That is astounding.”
Oracle CEO Safra Catz attributed the RPO standout to massive cloud contracts. “We signed four multi-billion-dollar contracts with three different customers in Q1,” said Catz in a statement. the chief executive expressed upbeat on the cloud business, stating: “It was an astonishing quarter—and demand for Oracle Cloud Infrastructure continues to build. Over the next few months, we expect to sign-up several additional multi-billion-dollar customers and RPO is likely to exceed half-a-trillion dollars.”
Catz revealed Oracle anticipated revenue from its cloud infrastructure to grow 77% to $18 billion this fiscal year, and then increase to $32 billion, $73 billion, $114 billion, and $144 billion over the following four fiscal years. “Most of the revenue in this 5-year forecast is already booked in our reported RPO. Oracle is off to a brilliant start to FY26,” she said.
Oracle’s MultiCloud database revenue from Amazon, Google and Microsoft grew at the incredible rate of 1,529% in the first fiscal quarter, and the company in October will introduce a new Cloud Infrastructure service called the Oracle AI Database that will allow customers to use the large language model (LLM) of their choice, such as OpenAI’s ChatGPT, atop their data stored in Oracle databases, said Oracle co-founder and Chairman Larry Ellison in the statement on Tuesday.
Microsoft and other cloud incumbents are accustomed to allocating more for property and equipment for their build-outs. Oracle’s capital expenditure (Capex) is expected to be $35 billion for this fiscal year, representing 65% yearly growth, Catz told analysts on the earnings call. When asked about how much it was going to cost Oracle to build out the infrastructure needed to service those customers, Catz said that one difference between Oracle and some of its rivals is in the way it deals with the property that houses data centers.
“I know some of our competitors, they like to own buildings,” she said. “That’s not really our specialty. Our specialty is the unique technology, the unique networking, the storage — just the whole way we put these systems together.”
