Oracle's Bold $40 Billion Bet on Nvidia Chips to Power AI Revolution in Texas
Oracle is making headlines with its ambitious plan to invest around $40 billion in Nvidia chips for a groundbreaking new data center being developed with the partnership of OpenAI in the heart of Texas. This colossal investment marks a pivotal moment in the ever-evolving landscape of artificial intelligence and the sky-high demand for computing power.
Situated in Abilene, Texas, this facility is touted as the first “Stargate” data center in the United States. This initiative aligns with a broader strategy by OpenAI and SoftBank to establish large-scale AI infrastructure. Expected to go live next year, once completed, this center aims to deliver 1.2 gigawatts of computing power, putting it on par with the largest data centers worldwide.
Oracle's interest focuses particularly on the acquisition of around 400,000 of Nvidia’s GB200 chips, among the most advanced processors available today for developing and running AI models. The plan is for Oracle to lease this computing power back to OpenAI, creating a robust supply chain for AI processing capabilities.
Ownership of the land rests with Crusoe and Blue Owl Capital, who have secured approximately $15 billion through a mix of debt and equity to fund this ambitious project. Construction kicked off in June 2024, slated to include eight buildings. It’s noteworthy that Oracle has inked a 15-year lease for the facility, with Stargate yet to contribute capital towards this specific project.
Most of the debt financing comes courtesy of JPMorgan, providing two significant loans totaling $9.6 billion, which includes a $7.1 billion loan recently announced. Both Crusoe and Blue Owl have separately injected about $5 billion in cash to this effort.
Meanwhile, Elon Musk is also gearing up for his own venture, expanding efforts in Memphis, Tennessee, intending to house around 1 million Nvidia chips in a facility dubbed “Colossus.” Musk's center primarily leverages earlier Nvidia H100 and H200 chips, with visions of this becoming the “first gigawatt AI training supercluster.” At the same time, Amazon is establishing another data center in Virginia, which is also expected to surpass the 1GW threshold.
This Abilene facility represents a shift for OpenAI as it seeks to reduce its dependency on Microsoft—an organization that has been pivotal due to providing cloud computing resources. Historically, a significant portion of Microsoft’s investment in OpenAI, which amounts to nearly $14 billion, came as cloud credits. However, OpenAI has voiced frustration over Microsoft’s struggles to keep pace with the escalating demand for computing.
Earlier this year, OpenAI and Microsoft chose to end their exclusive partnership, continuously discussing how long Microsoft will maintain rights to license OpenAI's models moving forward.
With Stargate’s ambitious execution, it’s anticipated to cater to a substantial share of OpenAI’s computing requisites. Since its launch in early 2025, the team is eyeing the goal of raising as much as $500 billion within four years to fund additional data centers in the United States.
Currently, OpenAI and SoftBank have each pledged $18 billion to the Stargate initiative, while Oracle and Abu Dhabi's MGX sovereign wealth fund have both committed another $7 billion. The collaborative effort positions these four entities at the helm of the project, with OpenAI and SoftBank steering the ship.
Though Stargate has yet to invest in any singular project, its ambitions stretch beyond the U.S. Recently, during a visit by President Donald Trump to the Gulf region, OpenAI announced plans for a new Stargate facility in Abu Dhabi. This ambitious site will stretch across 10 square miles, generating 5GW of power capable of operating over 2 million Nvidia GB200 chips, with construction being managed by the local AI firm G42.
As the AI revolution gains momentum, investments such as Oracle’s highlight the growing trend where tech giants are staking their claims in the future of technology – and, honestly, it looks like it’s going to be quite a ride!
