Stargate

OpenAI has reached an agreement with Oracle for which it has pledged to hire computing capacity worth $ 300,000 million within five years. The data come from The Wall Street Journalwhere sources close to that agreement cite. The implications are huge. Why is it important. Yesterday Oracle shot in the stock market after announcing that he had had good results, but above all Future income would increase by 359% up to 455,000 million dollars. Although there were suspicions about what could have happened to that extraordinary growth, we now know what happened. And what happened is the Stargate project. The numbers do not fit. The agreement will begin in 2027 and priori seems very risky, especially since OpenAi has no money. Its annual income will be about 10,000 million dollars in 2025, but will have to pay for 60,000 million annually to Oracle to comply with the agreement. Not only that: Oracle will also depend on receiving that income, because now a large part of them will come as a single client. As they point out in WSJ, Oracle is likely to have to borrow to buy the chips necessary to create those data centers that OpenAi will use as part of the agreement. 4.5 GW of calculation power. The contract will make OpenAi access a 4.5 GW computing capacity. It is a way to measure the energy consumption of the center or data centers that will be used to serve the firm’s AI models. The figure is huge, and to put it in perspective, it represents almost 40% of the entire current computing power of Europe, which amounts to 11.9 GW According to IEA. The Stargate Resurge project. The announcement of the Project Stargate, which raises an investment of 500,000 million dollars in data centers for AI, returns to the present. The accounts seem not to leave Despite the recent idyll Between Openai and Softbank, but in July the company of Sam Altman announced that his company and Oracle They had arrived to “an agreement to develop 4.5 additional capacity of capacity in Stargate data centers in the United States.” More bubble indications. The agreement between Openai and Oracle is absolutely huge and confirms that disturbing tendency of the extraordinary expense in data centers that we have been living for months. That figures dance states with the fact that for now all the companies of AI are burning money as if there were no tomorrow And they are far from profitable. That has caused alarms and alerts to be triggered on a IA bubble potential. Microsoft begins to go to the background. The agreement confirms that progressive separation Between Openai and Microsoft, which after the multimillionaire investment of 2023 had become the great technological partner of OpenAI. Each of these companies this now working in their respective plans b. The contract between Openai and Oracle makes that separation of roads once clearer. Doubts about Oracle. This agreement has turned the company into the new beautiful AI girl, but it is not clear if you can fulfill a commitment as ambitious as the one that arises with this contract. To begin with, Oracle has many more debts regarding the money in cash, and its debt ratio on heritage (Debt to Equitiy) is 427%, a very high figure. Microsoft in comparison has 32.7% according to S&P Global Market Intelligence data cited In WSJ. A huge challenge. In addition Microsoft had a cash flow of 136,000 million dollars for the fiscal year that ended this June, while its Capex was 88,000 million dollars. Meanwhile, Oracle had a cash flow of 21.5 billion dollars and its Capex was $ 27.4 billion. Its capex in the coming years will have to shoot, and it is evident that the company has a huge challenge with this project. Image | Oracle In Xataka | If the question is whether there is an AI bubble, Sam Altman has just answered. One with which he is winning