Why did the Oracle-Peneai deal on Wall Street

This week, Openai and Oracle shocked the markets with a surprise 300 billion dollars, five years agreementPart of a breakthrough of new business that sent the shares of the cloud provider rises. But it may not have been sudden market. The deal is a reminder that, although Oracle Legacy is placed, the company still plays a major role in Amnesty International’s infrastructure.

On the side of Openai, the agreement was more unveiling the lack of details indicating. For one of them, the startup’s willingness to pay a lot for an account provides an appetite for startup – even if it is not clear where the electricity comes to the mentioned energy or how you will pay it.

Chirag Dekate, Vice President of the Gartner Research Company, TECHCRUNCH was clearly why both sides were interested in this deal. It is logical that Openai works with many infrastructure providers. It also diversifies the company’s infrastructure – spreads risks among many cloud service providers – and gives Openai a scaling advantage compared to competitors.

“It seems that Openai collects one of the most supernova computing of global artificial intelligence for the sake of extreme scale, and expanding the scope of reasoning when necessary,” said Dekate. “This is unique. This may be ideal for what the typical ecosystem should look like.”

Some industrial monitors expressed their surprise at the participation of Oracle, citing the decrease in the role of artificial intelligence compared to cloud competitors such as Google, Microsoft Azure and AWS. But Dekate argues that observers should not be surprised: Oracle has worked with Easter before and provides infrastructure for large American Tiktok.

“Over the decades, they have already built the basic infrastructure capabilities that enabled them to provide the scope and maximum performance as an essential part of their cloud infrastructure,” said Dekate.

Payment and power

But even as the stock market celebrates the deal, the main details are missing and the questions about power and payment remain.

Openai has released a series of infrastructure investment ads during the past year, each at the price of the price of the eye. Openai adhere to spending about $ 60 billion a year to calculate Oracle and 10 billion dollars To develop dedicated AI chips with Broadcom.

Meanwhile, Openai said in June that it had been struck 10 billion dollars of repeated annual revenuesIncreasing from about 5.5 billion dollars last year. This number includes revenues from consumer products, ChatGPT products, and API. While its CEO was Sam Al -Taman She drew a pink picture of its future horizons Regarding subscribers, products and revenues, the company burns billions of dollars for cash every year.

Energy is another question, or more specifically as companies plan the energy source needed to operate this level of account.

Industry observers expect an increase in the short term of natural gas, though Solar energy and batteries It can be said that it is in a better position to save energy in a closer time at a lower cost in many markets. Technology companies are also The great bet on the nuclear.

Despite the headlines on the market, the power effect on the expected energy growth in Openai is completely unexpected. Data centers are expected to consume 14 % of all electricity in the United States by 2040, according to a report Rhodium Group published yesterday.

Compute has always been a restriction for artificial intelligence companies, to the extent that their investors have Buy thousands of NVIDIA chips To ensure access to startups to the energy they need. According to what Andreneen Horwitz purchased more than 20,000 graphics processing units, while Nat Friedman and Daniel Gross rented access to a group of 4000 graphics processing units (although perhaps Meta has that now).

But an account has no value without strength. To ensure their data centers remain, large technology companies have been captured Solar farmsbuying Nuclear power plantsThe ink deals with Earth thermal companies.

To date, Openai was relatively calm on that front. CEO Sam German has placed many prominent stakes in the energy sector, including Okloand HeilonAnd exowatttBut the company itself did not offer money in space like Google, Meta or Amazon.

With a 4.5 Gigawatt account, this may change soon.

The company may play an indirect role, as it pushes Oracle to deal with physical infrastructure – which has extensive experience with – just as Altman has invested in startups that are in line with the future energy needs of Openai. This will leave the company “Asset Light”, which is undoubtedly satisfied its investors and helps to maintain its evaluation in line with other startups that focus on software and not with old technology companies, which are burdened with the price infrastructure.