Oracle is making significant strides in the AI infrastructure market, recently announcing a groundbreaking cloud services agreement that adds $30 billion to its annual revenue beginning in fiscal year 2028. While the identity of the client remains undisclosed, speculation suggests it could be a large company such as OpenAI or a similar organization. This deal has the potential to account for 25% to 33% of Oracle’s projected revenues for FY2028, based on its latest fiscal year earnings of $57.4 billion.
Industry experts view this agreement as a critical move for Oracle, which aims to elevate its standing alongside tech giants like Azure, AWS, and Google Cloud Platform (GCP). Scott Bickley, an advisory fellow at Info-Tech Research Group, heralded the deal as a major success for Oracle.
The company’s CEO, Safra Catz, recently detailed that Oracle’s multi-cloud database revenue is experiencing remarkable growth, achieving over 100% in expansion. Catz also reported the signing of multiple cloud services agreements, specifically highlighting this $30 billion commitment that begins in FY28.
Analysts suspect that the contract may be tied to a major player in the AI space serving the Asian market, perhaps organizations like ByteDance or OpenAI. Meanwhile, Matt Kimball, a VP at Moor Insights & Strategy, emphasized the promising growth trajectory of Oracle Cloud Infrastructure (OCI), noting that it has a remaining performance obligation of $138 billion—signifying expected future revenue from contracts yet to be recognized.
This growth is largely fueled by the rising demand for cloud computing, especially driven by AI models. Traditionally recognized as an enterprise resource planning (ERP) focused company, Oracle has been strategically investing in its cloud infrastructure since the launch of OCI in 2016. The company is a partner in the significant $500 billion Stargate project with OpenAI, Microsoft, Nvidia, and others, aimed at developing data center infrastructure in the U.S.
In addition to this, Oracle plans to escalate its investments in Abu Dhabi to enhance its cloud and AI capabilities in the region, has teamed up with IBM to foster agentic AI development, and created over 50 generative AI use cases with Cohere. Furthermore, Oracle is positioned as a key provider for ByteDance, which intends to invest $20 billion in global cloud infrastructure this year.
Larry Ellison, Oracle’s CTO and co-founder, expressed the company’s ambition to lead in cloud databases and applications during a recent earnings call. He pointed out that Oracle’s extensive enterprise data positions the company advantageously. Ellison also highlighted the flexibility of Oracle’s multi-cloud strategy and asserted that Oracle 23ai is uniquely designed to meet the requirements of AI workloads while preserving customer privacy.
To maintain service quality for its existing clients, Oracle is taking a careful and financially responsible approach to building its infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS). Bickley noted that the company only invests capital after securing customer agreements, allowing it to avoid costly debt while stabilizing revenue streams over multi-year deals.
Despite the monumental nature of this new contract, analysts agree that it will not compromise Oracle’s ability to serve existing customers, given that the required data centers are already constructed or under development. Kimball reassured stakeholders by stating that OCI is adept at catering to a diverse customer base.
Overall, analysts have a positive outlook on Oracle’s developments, emphasizing that the AI market has room for multiple leading companies. This recent agreement signals that the AI revolution is not only imminent but also sustainable, bolstering confidence in Oracle’s future trajectory in the cloud infrastructure landscape.
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