OpenAI’s Spending Spree is Reordering the Cloud Market

When OpenAI two months ago agreed to rent an unfathomably large amount of data center capacity from Oracle (4.5 gigawatts, or enough to power several large cities), we thought the market would have priced in the eventual mammoth revenue from that publicly announced deal. We were wrong.

On Tuesday, Oracle disclosed that computing contracts would bring in more than $300 billion in additional revenue in the next five years. While it didn’t identify the customers responsible, the OpenAI deal is likely a key one. Oracle’s new revenue forecasts pushed its stock up 35% in one day, cementing the once-stodgy database provider as a substantial AI cloud provider with a nearly $1 trillion market capitalization. Bananas.

However, the OpenAI-Oracle cloud deal is a reminder—and perhaps a scary one—of how much of the tech market’s value right now hinges on OpenAI, Anthropic, Meta Platforms and a handful of other major AI developers that are spending big to rent cloud servers. They’re able to do that because Middle Eastern and other large investors are willing to underwrite untold amounts of cash burn—$115 billion just at OpenAI.