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Oracle and OpenAI sealed a massive $300 billion cloud computing agreement, according to a report by the Wall Street Journal.

In accordance with reports from The Wall Street Journal, Oracle secured a contract with OpenAI worth a whopping $300 billion for the provision of computing power to drive advancements in AI technology

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Oracle allegedly agrees on a massive $300 billion alliance with OpenAI in the realm of cloud...
Oracle allegedly agrees on a massive $300 billion alliance with OpenAI in the realm of cloud computing, according to the Wall Street Journal reports.

Oracle and OpenAI sealed a massive $300 billion cloud computing agreement, according to a report by the Wall Street Journal.

Oracle's stock soared on September 10, reaching its highest point since 1992, following an optimistic forecast for its artificial intelligence (AI) revenue. The tech giant's shares rose by 35.95%, reaching $328.33, and its market capitalization increased to a staggering $922.2 billion.

The surge in Oracle's stock was spurred by the company's ambitious plans for its Oracle Cloud Infrastructure. Oracle forecasts that its cloud revenue will reach an impressive $144 billion by 2030, with a significant 77% increase expected by 2026, taking the revenue to $18 billion.

However, this ambitious growth strategy comes with its risks. Oracle faces the potential of concentrating a significant portion of its future revenue on a single client, a risk that some analysts have described as a "risky gamble." The deal, reported to be one of the largest ever signed in the cloud computing sector, requires a capacity of 4.5 GW, equivalent to the energy consumption of four million homes.

The terms of the deal, set to come into effect in 2027, stipulate that companies will pay an average of $60 billion annually. The deal's value significantly exceeds the current revenue of the startup involved, raising questions about Oracle's financial strategy.

To meet the demands of the deal, Oracle may need to take out a loan to purchase AI chips for its data centers. This move could potentially impact Oracle's financial health in the short term.

Interestingly, a search for a company signing a 4.5 GW cloud computing contract for five years in 2027, as reported by the Wall Street Journal, yielded no results, suggesting that Oracle's deal could be a groundbreaking move in the industry.

It's worth noting that OpenAI, a leading AI company, currently has an annual revenue of around $10 billion. The scale of Oracle's deal puts it in the same league as significant players in the AI industry.

In conclusion, Oracle's mega cloud deal represents a bold step forward for the tech giant. While it presents risks, it also offers the potential for significant growth and industry leadership. Only time will tell if this gamble will pay off for Oracle.

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