Episode summary
Oracle, OpenAI Expand Stargate Deal for More US Data Centers | Bloomberg Intelligence
Bloomberg Intelligence
· · Hosts: Paul Sweeney, Isabelle Lee · Guests: Anurag Rana, Reshmi Basu, Ira Jersey
Summary
OpenAI’s expanded Stargate arrangement with Oracle is the central market-moving story: the guest said OpenAI has agreed to rent about 4.5 gigawatts of U.S. data-center power, with Oracle building multiple sites across several states, including Texas, Michigan, and Wisconsin under consideration. The guest argued the deal gives Oracle a rare advantage in AI infrastructure because it has a large paying customer up front, allowing it to spend heavily now and recognize revenue over time.
The guest also said Oracle’s capex will likely run well above its roughly $25 billion guide over the next 3 to 5 years, but sees that spending as necessary to compete with Microsoft and Amazon. He said Oracle’s database franchise and cloud applications give it cash flow to support the buildout, and that this customer plus others could add another $30 billion by FY28.
The episode then shifted to Warner Bros. Discovery, where the guest described JPMorgan’s role in a fast, highly unusual debt restructuring that used a $17.5 billion bridge loan, cut about $3.2 billion of debt, and created a potential playbook for investment-grade issuers. Ira Jersey then said the latest labor data pushed a July Fed cut off the table, with September still possible but not his base case, and he sees the Fed holding until the fourth quarter.
Key takeaways
- OpenAI’s Stargate deal could drive about 4.5 gigawatts of U.S. data-center power demand for Oracle, with multiple states in play.
- The guest expects Oracle’s AI and cloud capex to run well above the company’s $25 billion guide over 3 to 5 years.
- Oracle’s database and cloud applications business gives it the cash flow to fund a large infrastructure buildout, unlike smaller rivals.
- JPMorgan’s Warner Bros. Discovery deal used a $17.5 billion bridge loan and cut about $3.2 billion of debt, which the guest called a new playbook for investment-grade issuers.
- Ira Jersey said the jobs report removed July rate cuts from the market and pushed the Fed’s next likely move into the fourth quarter.
Notable quotes
“Open AI has agreed to rent a massive amount of computing power from Oracle data centers as part of its Stargate initiative totaling about 4.5 gawatts”
“we think the company gave guidance of about capex of 25 billion. Uh we think that's going to be low”
“this particular customer or this customer and a few others by FY28 will add another $30 billion on top of the 10 that we are talking about”
“JP Morgan needed to do a destru um a restructuring of the debt stack so basically what they did is they provided 17.5 billion bridge”
How the episode opens
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Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. I tell you, there's a lot of news in the technology side of the business on Open AI.
Uh, Open AI has agreed to rent a massive amount of computing power from Oracle data centers as part of its Stargate initiative totaling about 4.5 gawatts. I don't know what a gigawatt is, but it sounds big of data center power in the US. So, I have no idea what that means.
Um, and Open AI is not I mean Bloomberg AI is give me some stuff, but I need to go to the source. Honorag Ron a technology analyst for Bloomberg Intelligence. Uh, Honor, it seems like we're seeing a lot of deals getting inked here in the tech space.
this open this AI story still moving along at a great pace. Talk to us about what's going on at Oracle. Yeah, so this is something we discussed a few days ago when Oracle was up, you know, sharply at that point.
They didn't disclose the name of the client, but that seems like, you know, as we said, uh it is OpenAI. This is part of the Stargate project that came out right after the president got elected at the beginning of January or the middle the end of Jan. Um this is a big project.
It's going to take several years to build out. It's going to be very a humongous data centers across the country and perhaps even globe where open AAI is is basically buying computing capacity from Oracle with the help of SoftBank you know funding part of that particular project.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- stargate deal
- oracle data centers
- openai computing demand
- us data center power
- fed rates outlook
Companies and tickers mentioned
- ORCL
- Oracle
- OpenAI
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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