"Last week, Oracle surprised Wall Street with a massive $300 billion deal with OpenAI, a five-year deal that helped send Oracle's stock soaring-and brought simmering fears of an 'AI bubble' back to the surface. Oracle shocked analysts in its latest quarterly earnings call with revenue projections that cited $455 billion in contracts, up 359% from a year earlier. The optimistic forward-looking numbers caused the company's stock to jump 36% on Wednesday, the company's biggest one-day increase ever, and briefly made CEO Larry Ellison the richest man in the world."
"Part of the reason Oracle was able to strike the deal with OpenAI at all is due to Ellison's courting of Nvidia CEO Jensen Huang, which has allowed his company, despite previously trailing behind other cloud providers, to secure a large stockpile of top-of-the-line Nvidia GPUs and position itself as a significant player in the AI infrastructure space. The rally added to the 45% gain the company already notched up this year, and cemented Oracle's AI-fueled comeback. But while securing top-tier GPUs has bolstered Oracle's infrastructure position, some analysts were quick to warn that the financial risk was heavily concentrated in a single, unproven customer."
Oracle agreed to a five-year, $300 billion contract with OpenAI that triggered a major market reaction. The company reported $455 billion in projected contracts, a 359% year-over-year increase, and its stock surged 36% in a single day, briefly making CEO Larry Ellison the world's richest person. Ellison's relationship with Nvidia CEO Jensen Huang enabled Oracle to secure large quantities of high-end Nvidia GPUs, strengthening its AI infrastructure position. Analysts warned that most of the $455 billion in remaining performance obligations is tied to the OpenAI deal, concentrating financial risk in a single customer. Remaining performance obligations are contracted but undelivered services and are not guaranteed revenue, and OpenAI's annualized revenue is around $12 billion, far below the contract size, heightening concerns about an AI bubble.
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