.Oracle: No Delays in the OpenAI Deal

Oracle on Friday pushed back against a report that said the company will complete data centers for OpenAI, one of its major customers, in 2028 rather than 2027.

The delay is attributed to a shortage of labor and construction materials, according to a Bloomberg report that cited unnamed sources. Oracle shares fell more than 4% after the market close.

“Site selection and delivery timelines were established in close coordination with OpenAI following execution of the agreement and were jointly agreed,” an Oracle spokesperson told CNBC. “There have been no delays to any sites required to meet our contractual commitments, and all milestones remain on track.”

The spokesperson did not provide a specific timeline for turning on the cloud infrastructure that will serve OpenAI. In September, OpenAI announced a partnership with Oracle valued at over $300 billion over the next five years.

“We have a good relationship with OpenAI,” Magouyrk said at an analyst meeting in October.

Doing business with OpenAI marks a relatively new chapter for the 48‑year‑old software giant. Historically, Oracle grew on the back of its database and enterprise applications. Today, its cloud infrastructure (OCI) accounts for more than one‑quarter of total revenue, yet the company remains a smaller hyperscaler compared with Amazon, Microsoft and Google.

OpenAI is also diversifying its hardware partners. In September, Nvidia disclosed a letter of intent to supply at least 10 gigawatts of AI compute equipment to the startup, with the first phase slated for the second half of 2026. However, a later filing noted that no definitive agreement had been reached, underscoring the uncertainty that still surrounds the deal.

Beyond Nvidia, OpenAI is exploring custom silicon solutions with Broadcom. Broadcom’s CEO Hock Tan outlined a roadmap that envisions 10 gigawatts of capacity for OpenAI in 2027‑2029, with limited expectations for 2026.

OpenAI declined to comment on the status of its hardware negotiations.

Market and Technical Implications

The reported postponement highlights two broader trends shaping the AI infrastructure market:

• Supply‑chain constraints. The global shortage of skilled construction workers and critical building materials—such as steel and high‑density power cabling—has begun to affect the rollout of large‑scale AI data centers. Companies that rely on rapid deployment, like the hyperscalers, are increasingly turning to modular, prefabricated designs to mitigate these bottlenecks.
• Escalating compute demand. OpenAI’s projected compute needs exceed 10 gigawatts, a scale that rivals the combined capacity of several hyperscaler campuses. This level of demand forces GPU vendors and silicon partners to accelerate product roadmaps, with Nvidia pushing its H100/H200 family and Broadcom betting on custom AI ASICs that promise better performance‑per‑watt.

Oracle’s Strategic Position

Oracle’s entry into the AI‑focused hyperscale market serves multiple strategic objectives:

1. Revenue diversification. OCI’s growing share of total revenue reduces dependence on legacy license‑based software sales, a trend that analysts have flagged as vital for the company’s long‑term growth.
2. Competitive differentiation. By bundling its industry‑leading database technology with AI‑optimized infrastructure, Oracle can offer end‑to‑end solutions that appeal to enterprise customers seeking tighter integration between data management and machine learning workloads.
3. Partnership leverage. The multi‑billion‑dollar agreement with OpenAI provides Oracle with a marquee reference customer, which could help attract other AI‑centric firms that are evaluating cloud providers beyond the dominant AWS, Azure and Google Cloud platforms.

Financial Outlook

If Oracle can keep its OCI milestones on schedule despite the construction delays, the $300 billion OpenAI partnership could translate into:

• Annual incremental revenue growth of 5‑7% from AI‑related services.
• Higher-margin cloud contracts that bolster operating income, especially as Oracle continues to shift customers from on‑premise licenses to subscription‑based consumption models.
• Potential cross‑selling opportunities for Oracle’s autonomous database and ERP suites, as AI workloads generate new data pipelines that require robust transactional processing.

Investors will be watching Oracle’s ability to execute on these plans, particularly as the broader market anticipates a wave of AI‑driven spending that could reshape the competitive dynamics of cloud infrastructure for years to come.