Oracle is making a bold move in the AI cloud space, investing billions in massive new data centers. One high-profile site under construction in West Texas is reportedly set to cost the company over $1 billion annually just to operate, powered entirely by gas generators. This approach bypasses long waits for utility hookups, highlighting how urgently Oracle wants these facilities online and how willing it is to spend at scale, even amid environmental concerns.
Once known primarily for database software, Oracle has reinvented itself as a cloud powerhouse, securing major AI deals with companies like TikTok, Nvidia, and Elon Musk’s xAI. Its ambitious projects, including the record-breaking Stargate partnership with OpenAI, show Oracle’s commitment to becoming a central backbone for AI infrastructure.
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A Bold Move on Power
According to Bloomberg, citing unnamed sources, Oracle plans to operate the West Texas megasite using gas generators instead of waiting for a utility connection.
Getting approval and infrastructure to supply electricity from local grids can take years. Oracle’s approach demonstrates how urgently the company wants to bring these data centers online—and how willing it is to spend massive sums regardless of environmental concerns.
From Databases to AI Cloud
Founded in 1977 and initially known for its database software, Oracle has transformed over the last decade into a major player in cloud services. Its current focus is AI-focused cloud computing, where the company has quickly built a reputation for handling large-scale AI projects.
A key feature of Oracle’s cloud offerings is its “bare metal” approach, giving clients dedicated servers instead of shared ones. This setup provides faster performance and enhanced security, which has attracted major tech clients.
Oracle as the Backbone of AI
Oracle has become a critical infrastructure provider for AI companies. Its big break came with TikTok, where by 2022, all U.S. user traffic ran through Oracle servers, generating over $1 billion in annual revenue.
The company also powers Elon Musk’s xAI from a Utah data center and is building tens of thousands of AI chips for Nvidia. These moves have contributed to making founder Larry Ellison the world’s second-richest person, just behind Elon Musk.
Record-Breaking AI Deals
Recently, Oracle signed what Bloomberg calls the largest single cloud deal ever with OpenAI, part of the ambitious Stargate project announced at the White House in January. Under the agreement, OpenAI will develop roughly 4.5 gigawatts of data center power with Oracle—enough to power about 3.4 million homes. However, progress on this project has yet to be clearly observed in the real world.
The West Texas Megasite
The new gas-powered facility is located in Shackelford County, Texas, near another Oracle data center in Abilene. Developed by Vantage Data Centers, the site will have a staggering 1.4-gigawatt capacity, making it one of the largest data centers globally.
Oracle has not responded to requests for comment.
Frequently Asked Questions
Why is Oracle building a gas-powered data center?
Oracle wants to avoid long delays in connecting to local power grids. Using gas generators allows the company to start operations immediately, even if it’s costly and environmentally impactful.
Where is the new data center located?
The facility is in Shackelford County, Texas, near another Oracle data center in Abilene.
How much will it cost to operate?
Reports suggest over $1 billion per year to keep the West Texas site running.
What is the data center’s capacity?
The site will have 1.4 gigawatts of capacity, making it one of the world’s largest.
What is Oracle’s focus with these data centers?
The company is focusing on AI-focused cloud computing, supporting clients like TikTok, Nvidia, xAI, and OpenAI.
What is the Stargate project?
A collaboration with OpenAI to develop roughly 4.5 gigawatts of data center power, aimed at expanding AI infrastructure at scale.
Has Oracle commented on the project?
Oracle has not responded to requests for comment as of now.
Conclusion
Oracle’s aggressive investment in gas-powered data centers underscores just how serious the company is about dominating the AI cloud market. Willing to spend billions annually and bypass traditional energy infrastructure, Oracle is prioritizing speed, scale, and reliability over environmental concerns. From TikTok to Nvidia and OpenAI, its growing portfolio of AI clients shows that the company has become a central player in powering the next generation of artificial intelligence.
