OpenAI Rents Massive Oracle Power, Splits With Microsoft?

According to Bloomberg, OpenAI will rent additional capacity from Oracle totaling about 4.5 gigawatts of data center power in the U.S. as part of its Stargate initiative, underscoring the intense energy demands of cutting-edge artificial intelligence products.

This is an unprecedented amount of power—enough to supply millions of American homes. One gigawatt is equivalent to the output of a nuclear reactor and can power approximately 750,000 households.

To meet OpenAI’s growing demand, Oracle will build new data centers with partners across multiple locations in the U.S. Earlier this week, Oracle announced it had signed a single cloud services contract expected to generate $30 billion annually starting in fiscal 2028, without disclosing the client’s identity. According to a source, this is part of the Stargate project. Stargate is a $500 billion AI infrastructure project jointly backed by OpenAI, Oracle, SoftBank Group, and other partners, announced earlier this year. So far, Oracle has developed a massive data center for OpenAI in Abilene, Texas, with development partner Crusoe.

Importantly, OpenAI’s decision to rent this capacity from Oracle could be further evidence of a widening rift with Microsoft. Recent reports suggest OpenAI has started selling ChatGPT subscriptions at discounted prices, a move that negatively affects Microsoft’s interests. Microsoft recently walked away from two large data center deals, reportedly due to unwillingness to support additional ChatGPT training.

The core of the disagreement lies in OpenAI’s push to transform into a for-profit company—one that could go public, expand its customer base, and raise funds to drive further AI development. However, Microsoft appears reluctant to approve this shift, as it could significantly harm Microsoft's interests, particularly its access to OpenAI’s intellectual property.

There is even a risk that the partnership could shift from collaboration to confrontation. Microsoft has delayed approval of OpenAI’s proposed restructuring, and some OpenAI executives have accused Microsoft of monopolistic behavior in their multibillion-dollar partnership, calling for U.S. regulators to intervene.

If OpenAI fails to complete the transition by year-end, key investor SoftBank may withdraw its $20 billion funding commitment, potentially exposing OpenAI to hostile takeover risk. Under the current agreement, OpenAI requires Microsoft’s approval to proceed with the transition.