Oracle stock jumped late Wednesday after Bloomberg reported that the tech giant will expand its massive Stargate data center project with OpenAI. The news comes two days after Oracle disclosed that it had landed a cloud services deal it expects will be worth more than $30 billion annually starting in 2028, igniting a rally for Oracle shares.
OpenAI, the creator of ChatGPT, will rent additional cloud-computing capacity from Oracle totaling about 4.5 gigawatts of data center power in the U.S., according to the Bloomberg report, which cited anonymous sources. The agreements mark an expansion of the buzzy Stargate AI infrastructure project, according to the report.
Oracle Chairman Larry Ellison appeared at the White House in January along with OpenAI leader Sam Altman and SoftBank Chief Executive Masayoshi Son to announce Stargate. The project is targeting investments of up to $500 billion over the next five years to build data centers to power AI systems, with Nvidia among other partners. The work has focused so far on a large data center in Texas. The companies are now also reviewing sites in Texas, Michigan, Wisconsin and Wyoming for the data center sites, per Bloomberg.
On the stock market today, Oracle stock gained 5% to close at a record 229.98.
Oracle's $30 Billion Cloud Deal
On Monday, Oracle Chief Executive Safra Catz said through a regulatory filing that Oracle has "signed multiple large cloud services agreements," including one that could contribute $30 billion in annual revenue starting with the company's fiscal 2028. The company's fiscal years start with June. Oracle stock jumped 4% to a record high close following the news.
But Oracle didn't name the client. However, Bloomberg reported Wednesday that the Stargate agreement "makes up at least part of that disclosed contract."
That appears to be in line with expectations from some Wall Street analysts.
"Oracle has been clear the past two quarters that all of their provided guidance does not contemplate Stargate and only will if/when that contract is signed," Guggenheim analyst John DiFucci wrote to clients Monday. "We struggle to think of another deal that could possibly be of the magnitude as the one referenced today, so in our minds this likely means the Stargate contract has been signed, but the company has not said that."
D.A. Davidson analyst Gil Luria raised his price target for Oracle stock to 220 from 170 while reiterating a neutral call in a client note Wednesday. He said TikTok parent ByteDance could also be a company to watch for the big contract, particularly with reports reemerging about an investor group that includes Oracle buying TikTok's U.S. operations.
"Oracle is actively expanding its data center campuses in Johor, Malaysia, a location that is widely acknowledged within the industry to predominantly support ByteDance," Luria wrote. "As we know, ByteDance is one of the largest consumers of GPU capacity in the world to support their recommendation engines and internal AI research initiatives."
GPU refers to graphics processing units, such as those made by Nvidia for training AI algorithms.
Oracle Stock's Big Rally
After a rough start to the year, Oracle stock soared back to record highs with a 32% rally in the month of June. A strong fiscal Q4 earnings report helped bolster Wall Street's confidence Oracle will benefit from AI cloud demand. Oracle told investors last month that it expects cloud infrastructure revenue to grow 70% during fiscal 2026. Oracle's total cloud infrastructure revenue for its 2025 fiscal year was $10.3 billion.
Oracle stock is ahead 34% year to date. Last year, Oracle rallied 60% to post its best share price-growth performance since 1999. The database-software leader has been investing heavily to build AI-capable data centers. It is competing for greater share in a cloud-computing market dominated by Amazon, Microsoft and Google.
Oracle broke out on June 12 from a long consolidation pattern with a buy point at 198.31. The stock is extended past a 5% buy zone above that level, according to IBD MarketSurge.
