Why the Oracle-OpenAI deal caught Wall Street by surprise

This week, OpenAi and Oracle shocked the markets with a surprising agreement of $ 300 billion, five -year agreement, part of an increase in a new company that shot up the shares of the cloud provider. But maybe the markets had not surprised. The deal is a memory that, despite the old status of Oracle, the company still plays an important role in the AI ​​infrastructure.

On the OpenAi side, the agreement was more revealing than the lack of details suggest. Firstly, the willingness of the startup offers so much for accounts for accounts a measurement of the appetite of the startup – even if it is unclear what the electricity to process, calculate, comes from or how it will pay for it.

Chirag Dekate, vice -president at research agency Gartner, told WAN that it is clear why both parties were interested in this deal. It makes sense for OpenAI to work with various infrastructure providers, he noticed. It also diversifies the company’s infrastructure – the distribution of risks among different cloud providers – and gives OpenAI a scale benefit compared to competitors.

“OpenAi seems to put together one of the most extensive global AI -super -computering foundations for extreme scale, where necessary inference scaling,” said Dekate. “This is quite unique. This is probably an example of what a model ecosystem should look like.”

Some viewers from the industry expressed that Oracle was involved, with reference to the reduced role of the company in the AI ​​tree compared to cloud rivals such as Google, Microsoft Azure and AWS. But Dekate argues that observers should not be so surprised: Oracle has previously worked with hyperscalers and offers the infrastructure for the large American company of Tiktok.

“In the course of the decades, they actually built core infrastructure opportunities that enabled them to deliver extreme scale and performance as a core part of their cloud infrastructure,” said Dekate.

Payment and Power

But even when the stock market celebrates the deal, the most important details are missing and there are questions about power and payment.

In the past year, OpenAi has made a series of announcements of infrastructure investments, each with a striking price tag. OpenAi has committed itself to spending approximately $ 60 billion a year for calculating Oracle and $ 10 billion To develop adapted AI chips with Broadcom.

In the meantime, OpenAi said in June that it achieved $ 10 billion in annual turnover, an increase of around $ 5.5 billion last year. That figure includes income from the company’s consumer products, chatgpt -business products and the API. And although the CEO Sam Altman has painted a rosy picture of his future perspectives in terms of subscribers, products and income, the company burns billions of dollars in cash every year.

Power is another question, or more specifically where the companies are planning to find the energy needed to perform this calculation level.

Observers in the industry predict a short-term boost for natural gas, although solar energy and batteries are demonstrably positioned better to deliver in many markets faster and at lower costs. Technology companies also bet on nuclear.

Despite the headlines for the market, the energy impact of the expected growth of OpenAi is not completely unexpected. Data centers are expected to consume 14% of all electricity in the US in 2040, according to a report The Rhodium Group published yesterday.

Compute has always been a limitation for AI companies, so much so much that investors have bought thousands of Nvidia chips to ensure that their startups have access to the power they need. Andreessen Horowitz reportedly bought more than 20,000 GPUs, while Nat Friedman and Daniel Gross rented access to a cluster of 4,000 GPU (although perhaps perhaps Meta owns that now).

But compute is worthless without strength. To ensure that their data centers continue to be juicing, large technology companies have picked up solar farms, buy nuclear power plants and deals ink with geothermal startups.

Until now, OpenAi has been relatively quiet on that front. CEO Sam Altman has placed various prominent bets in the energy sector, including OKLO, Helion, and ExowattBut the company itself has not thrown money into space such as Google, Meta or Amazon.

With a 4.5 Gigawatt Compute deal that can change soon.

The company can play an indirect role and pay Oracle to handle the physical infrastructure – something that has extensive experience – just as Altman invested in startups in line with the future power needs of OpenAi. That will be the company ‘Activalicht’, leaving something behind, something that will undoubtedly please its investors and will keep its appreciation in accordance with other software-oriented AI-startups and not with Legacy technology companies, which are charged with expensive infrastructure.