Oracle Rides Major Deals With OpenAI, Nvidia to Cloud Turnaround

Oracle Corp.’s Larry Ellison used to scoff at the idea of cloud computing, saying in 2008 that it was “complete gibberish.”

Now, the success of Oracle’s cloud infrastructure unit is why the company’s stock price has soared and made Ellison, its chairman and co-founder, the second-richest person in the world.

The AI boom has dramatically increased demand for computing and storage over the internet. Oracle, a software company that had long struggled to find its niche in this market, gained a foothold through scoring major customers. Today, it’s helping power Elon Musk’s xAI from a data center in Utah, assembling a cluster of tens of thousands of AI chips for Nvidia Corp. near Singapore and recently inked what is likely the largest single cloud deal ever with OpenAI, the leading artificial intelligence company.

Bloomberg's Brody Ford reports.

Oracle is on the hook for tens of billions of dollars to develop unprecedentedly large data centers amid energy and material shortages. That includes a plan to spend more than $1 billion a year just to power one new megasite in West Texas with gas generators rather than wait for utility connection, according to people familiar with the plans.

With all of this spending, Oracle recorded a negative annual cash flow for the first time since 1990. And questions remain about the longevity and margins of offering infrastructure to train AI models.

Oracle, founded in the 1970s, had long faded from tech prominence. On the road to its return in the AI era were internal battles to convince Chief Executive Officer Safra Catz to invest in the cloud, recruitment of key customers like TikTok and the rise of a brash executive named Clay Magouyrk. Bloomberg spoke with more than 30 current or former employees and customers to understand how Oracle can deliver on its towering promises. They detailed spiraling costs, accelerated timelines to satisfy OpenAI, regulatory roadblocks and the hiring of hundreds of former Amazon cloud staffers, speaking anonymously to discuss the inner workings of a famously private and litigious company. Oracle declined to comment.

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