Oracle CEO: Of course OpenAI can afford $60 billion per year in cloud service fees.

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Oracle's newly appointed Co-CEO Clay Magouyrk expressed strong confidence in OpenAI's payment ability, saying that this artificial intelligence company "certainly" can afford an annual $60 billion cloud infrastructure cost.

On Monday, Magouyrk emphasized in an interview with the media at the Oracle AI World Conference that OpenAI “certainly” has the ability to pay up to $60 billion per year for cloud services.

Magouyrk said that OpenAI’s user growth is “unprecedented,” having reached a scale of nearly 1 billion users, and such user growth strongly supports its payment capability.

WallstreetCN previously reported that the two companies reached a major five-year deal worth over $300 billion in July this year. This means OpenAI will need to pay Oracle about $60 billion per year on average.

According to public information, OpenAI recorded a net loss of $5 billion in 2024. Balancing massive infrastructure investment with achieving profitability remains a core challenge it faces.

User scale is the foundation of confidence

Oracle’s confidence comes mainly from OpenAI’s “unprecedented” user growth rate.

Magouyrk explained at the Oracle AI World Conference held in Las Vegas:

Just look at their growth rate; the user base is close to a billion. This is truly unprecedented.

According to data released by OpenAI last week, its flagship product ChatGPT has reached 800 million weekly active users in less than three years since its public launch.

In Oracle’s view, such a massive user base is the key for its business model to eventually cover the high operating costs. Another Co-CEO interviewed alongside Magouyrk, Mike Sicilia, also expressed optimism about the potential of OpenAI's technology.

Sicilia revealed that Oracle has already begun integrating OpenAI’s AI models into its healthcare business, specifically applied to a portal for patients to view electronic health records.

Oracle acquired electronic medical records provider Cerner for about $28 billion in 2022. Regarding OpenAI, Sicilia said:

I’ve seen the results, and I truly believe OpenAI will have a huge impact across many industries and all types of businesses.

A high-stakes “big bet”

For both OpenAI and Oracle, the $300 billion contract set to begin in 2027 is a high-risk gamble.

OpenAI is still a loss-making startup, reporting annualized revenue of about $10 billion in June, which is far below the $60 billion it would need to pay per year for this agreement.

The success of this deal depends entirely on the assumption that ChatGPT can sustain its explosive growth and be widely adopted by billions of users globally, as well as by major enterprises and governments.

While OpenAI’s growth is unusual, it is also facing growing pressures, including a costly battle for talent, tense negotiations over its partnership with Microsoft, and a for-profit restructuring currently under review by regulators in two states.

For Oracle, the risk lies in betting its future massive income on a single client, and the company may need to borrow in order to purchase huge quantities of AI chips needed to support these data centers.

Oracle’s financial report shows that as of the first quarter of fiscal 2026, the company’s net debt exceeded $80 billion, with a leverage ratio remaining above 4x, which is near or above the downgrade threshold for major rating agencies.

In recent years, simultaneous increases in capital expenditures and acquisitions, along with continued high dividends, have accelerated Oracle’s financial leverage and credit rating downgrades, putting it well below the flexibility of “high-quality” hyperscale cloud providers.

Previously in September, WallstreetCN published an article stating that analysts from Morgan Stanley believe Oracle’s future success depends on whether it can efficiently build out data center capacity, maintain OCI order growth momentum, and successfully integrate the previously acquired Cerner business.

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