Shares of Oracle Corporation (ORCL) soared after OpenAI reportedly agreed to lease around 4.5 gigawatts of data center power from the software company in the U.S. as part of the Stargate project.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 55% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
The news follows Oracle’s recent reveal that it secured a cloud services agreement projected to generate over $30 billion in annual revenue beginning in 2028. Investors responded positively to the news, viewing it as a major win for Oracle in the competitive cloud and AI space. ORCL stock rose over 5% on Monday following the initial news and gained another 5% on Wednesday, following market reports suggesting OpenAI is the customer behind the deal.
Oracle Ramps Up Data Center Expansion
As part of the deal, Oracle will build several data centers nationwide in collaboration with partners, with potential locations such as Texas, Michigan, Wisconsin, Wyoming, New Mexico, Georgia, Ohio, and Pennsylvania. The company also plans to increase the power capacity of its current site in Abilene, Texas.
Additionally, it represents a major expansion of the Stargate project, launched by President Donald Trump earlier this year. Notably, the project aims to strengthen the U.S.’s position as a global leader in AI and build infrastructure to support high-level AI research and development across the country.
The latest deal also highlights OpenAI’s move to partner with additional cloud providers as it scales up to meet growing demand for its AI-driven products and services. Interestingly, the 4.5 gigawatts of capacity represent nearly a quarter of the total data center capacity currently operating in the U.S.
Is ORCL Stock a Buy?
Overall, Wall Street has a Moderate Buy consensus rating on ORCL stock, based on 20 Buys and 11 Holds assigned in the last three months. The average Oracle stock price target of $216.65 implies about 6% downside from current levels.
Year-to-date, ORCL stock has grown by over 38%.
