Oracle CEO Clay Magouyrk expressed strong confidence in OpenAI’s financial capacity to cover significant cloud computing costs. During the recent AI World conference, he stated that OpenAI can indeed afford an annual expenditure of $60 billion on cloud services.
OpenAI’s Growth and Cloud Deal with Oracle
In July, OpenAI and Oracle finalized a substantial five-year agreement valued at over $300 billion. This partnership underscores OpenAI’s rapid growth trajectory, despite the challenges it faces. The company reported a loss of $5 billion in 2024, illustrating the demanding landscape of artificial intelligence.
Record User Engagement
Magouyrk highlighted OpenAI’s remarkable achievement of nearing a billion users in a remarkably short time. Since the launch of ChatGPT less than three years ago, it has garnered 800 million weekly active users.
Oracle’s Integration of OpenAI Technology
Oracle is already incorporating OpenAI’s models into its healthcare solutions, particularly within patient portals associated with Cerner, which they acquired for $28 billion in 2022. This integration reflects the growing importance of AI technologies in various sectors.
Collaborations and Future Plans
To support its AI initiatives, OpenAI is utilizing Nvidia chips rented through Oracle and collaborating with several prominent companies, including CoreWeave, Google, and Microsoft. Moreover, OpenAI is set to develop custom AI chips, with manufacturing support from Broadcom.
- Broadcom and OpenAI aim to deliver 10 gigawatts of chip capacity.
- Powering this extensive infrastructure remains a forthcoming challenge, as noted by Co-CEO Mike Sicilia.
Analyst Insights on Oracle Stock
Investors are keeping an eye on Oracle’s stock. Analysts maintain a “Moderate Buy” consensus on ORCL. This rating is based on 27 Buy recommendations, eight Hold ratings, and one Sell rating noted in recent months.
Currently, the average price target for ORCL shares stands at $346.45, suggesting a potential upside of 12.5%. This positive outlook reflects Wall Street’s confidence in Oracle’s strategic direction, especially with its cloud computing partnerships with innovative companies like OpenAI.
