Oracle Joins the AI Race: Microsoft's Stock Dips as OpenAI Expands Partnerships

In the midst of intensified global competition in artificial intelligence, Microsoft recently announced modifications to its important contractual terms with OpenAI. This development came on the heels of a $500 billion AI investment initiative known as "Stargate," aimed at bolstering the United States' lead in the global AI arena.

According to the new agreement, since 2019, Microsoft has provided exclusive infrastructure for OpenAI's computational capacity. Now, Microsoft is reshaping this framework by permitting OpenAI to expand its computational power for the research and development of large models. This shift signifies that Microsoft is no longer OpenAI's sole computational capacity provider, though it still retains exclusive rights to provide API services to OpenAI. This API exclusivity remains crucial to software developers and enterprise customers, preserving Microsoft's dominant role in the OpenAI ecosystem, even as OpenAI collaborates with Oracle.

Notably, Microsoft will maintain the right of first refusal when OpenAI seeks additional computational resources. Oracle's entry marks a significant shift in the AI sector, with the planned collaboration with SoftBank and OpenAI under "Stargate" initially committing $100 billion, aiming to increase to an impressive $500 billion over four years to establish new AI data centers in the U.S. This project will primarily leverage NVIDIA’s chips, targeting the upcoming AI boom.

Insiders reveal that OpenAI will secure equity, governance, and operational control within the "Stargate" initiative, which will also feature an independent board and a CEO appointed by founding members. In this shared-resources, win-win structure, the previous cooperation rules between OpenAI and Microsoft seem to no longer suffice, with Oracle's involvement clearly changing the game dynamics.

Although Oracle's market share in cloud computing still trails Amazon, Microsoft, and Google, its Chairman Larry Ellison confirmed the construction of the first Texas data center under "Stargate," each boasting a footprint of 500,000 square feet (about 46,452 square meters). An initial ten buildings are planned, with expectations to expand to twenty in the future.

In conclusion, these strategic adjustments and collaborations are set to deeply influence the competitive landscape of the AI sector, not only reshaping the partnership between Microsoft and OpenAI but also injecting new momentum into Oracle’s participation. As the "Stargate" project progresses, the future of AI development holds limitless potential.