Oracle's $40B Nvidia Chip Investment Boosts Texas AI Data Center

Oracle is set to invest approximately $40 billion in Nvidia chips to power a major new data center in Texas, developed by OpenAI, as reported by the Financial Times. This deal, one of the largest chip acquisitions to date, underscores the surging demand for AI computing resources.

Located in Abilene, Texas, the facility is the first U.S. “Stargate” data center. Supported by OpenAI and SoftBank, it is part of a broader initiative to build large-scale AI infrastructure. Scheduled for completion next year, the Texas center will deliver 1.2 gigawatts of computing power, ranking it among the world’s largest.

Oracle plans to acquire around 400,000 Nvidia GB200 chips, among the most advanced processors for AI model training and operation. Oracle will lease the computing capacity from these chips to OpenAI, according to sources familiar with the agreement.

The site is owned by Crusoe and Blue Owl Capital, which have secured $15 billion in combined debt and equity financing for the project. Construction started in June 2024, with the campus comprising eight buildings. Oracle has signed a 15-year lease for the facility, though Stargate has not directly invested in this specific site.

JPMorgan is providing the majority of the debt financing, issuing two loans totaling $9.6 billion, including a $7.1 billion loan announced recently. Crusoe and Blue Owl have each contributed roughly $5 billion in cash to the initiative.

Elon Musk is advancing a separate project in Memphis, Tennessee, planning to deploy about 1 million Nvidia chips. Dubbed “Colossus,” this center primarily uses Nvidia’s H100 and H200 chips. Musk recently announced the next phase will create the “first gigawatt AI training supercluster.” Meanwhile, Amazon is developing a data center in Virginia that will also exceed 1GW.

The Abilene project reflects OpenAI’s strategy to reduce reliance on Microsoft. Until recently, OpenAI depended heavily on Microsoft for cloud computing resources, with much of Microsoft’s nearly $14 billion investment provided as cloud credits. However, OpenAI has grown frustrated with Microsoft’s inability to meet its escalating computing demands.

Earlier this year, OpenAI and Microsoft ended their exclusive partnership and are negotiating the duration of Microsoft’s licensing rights to OpenAI’s models.

Moving forward, Stargate is expected to meet a significant portion of OpenAI’s computing needs. Launched in early 2025, the group aims to raise up to $500 billion over four years to fund additional U.S. data center projects.

OpenAI and SoftBank have each committed $18 billion to Stargate, while Oracle and MGX, an Abu Dhabi-based sovereign wealth fund, have each pledged $7 billion, according to informed sources. These four entities will hold equity in the project, with OpenAI and SoftBank leading the effort.

While Stargate has not yet funded specific projects, its ambitions extend beyond the U.S. Last week, during President Donald Trump’s Gulf region visit, OpenAI announced a new Stargate facility in Abu Dhabi. Spanning 10 square miles, it will provide 5GW of data center power, capable of supporting over 2 million Nvidia GB200 chips. Local AI firm G42 is overseeing construction.

See also: Can the US enforce a global AI chip restriction?

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