Oracle's next major data center project could be gas powered

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Oracle may need to use gas generators

Oracle
(Image credit: Oracle)
  • Oracle's upcoming data center could need power from temporary gas generators
  • West Texas data center could come online before it gets connected to the grid
  • Oracle recently added a number of major customers for its cloud services

A new Bloomberg investigation into Oracle’s operations has revealed how the company has turned from a database pioneer to a major cloud service provider over the past decade – an unlikely transition when the then-CEO Larry Ellison (now CTO) called cloud computing “complete gibberish” in 2008.

Today, though, Oracle is responsible for powering xAI in Utah and building GPU clusters for Nvidia in Singapore, Japan and Indonesia, not to mention its joint effort with OpenAI worth 5+GW of computing power.

Then, in 2022, TikTok became an important customers for Oracle. Now routing all US traffic through Oracle, TikTok generates around $1 billion in revenue for Oracle every year.

Oracle’s future data center plans

All of this has come at a cost, though, and Oracle now needs to add more data center capacity to keep up with demand. The company has already committed to spending tens of billions on mega-sites despite supply chain hurdles, but OpenAI demand from the Stargate project has added even more pressure.

As a result, its West Texas ‘Frontier’ campus could need temporary gas power until grid connections arrive. Expected to boast a 1.4GW capacity, it could cost Oracle over $1 billion annually to power using gas generators (according to Bloomberg, citing people familiar with the plans).

This comes at a time when Oracle faces financial struggles, even despite growth. For the first time since 1990, Oracle recently posted its first negative cash flow due to a spending surge.

“Oracle is going through a business model transformation,” Bernstein analyst Mark Moerdler noted. “We believe the margin will rebound and cash flow will be substantial once they get through this investment phase.”

Speaking about fiscal 2025, CEO Safra Catz said Oracle is expecting higher Cloud Infrastructure growth rates and total cloud growth rates this year despite a strong uptick last year.

“Oracle is well on its way to being not only the world's largest cloud application company – but also one of the world's largest cloud infrastructure companies,” Catz added.

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Craig Hale
Craig Hale

With several years’ experience freelancing in tech and automotive circles, Craig’s specific interests lie in technology that is designed to better our lives, including AI and ML, productivity aids, and smart fitness. He is also passionate about cars and the decarbonisation of personal transportation. As an avid bargain-hunter, you can be sure that any deal Craig finds is top value!

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