Larry Ellison pushes Oracle into AI data centers with heavy borrowing

In short: Oracle co-founder Larry Ellison is using big loans and long contracts to turn Oracle into a major supplier of the computing power used to run and train AI.

What's going on

Oracle has long been known for database software that big companies use to store and manage information. The New York Times reports that its co-founder and CTO, 81-year-old Larry Ellison, is now pushing Oracle to become a bigger player in AI infrastructure, meaning the data centers and computers that AI companies rely on.

A big part of this shift is Oracle signing very large, long-term deals to provide “compute,” which is basically rented computer power (like renting a fleet of trucks instead of buying them). Reports cited in the story describe a roughly $300 billion agreement in which OpenAI rents massive computing capacity from Oracle. Oracle has also said its outstanding contract revenue, often called backlog, has surged to about $455 billion, with expectations it could pass $500 billion.

Another centerpiece is Project Stargate, a joint effort involving Oracle, OpenAI, and SoftBank. It was announced at the White House on January 21, 2025. The plan is to invest up to $500 billion over four years in US AI data centers, with an initial $100 billion and early construction starting in Texas.

What to watch

Oracle is borrowing heavily to build this capacity. Its debt-to-equity ratio has reportedly climbed above 400%, meaning it has far more debt than shareholder value on its books. The big question is whether AI demand stays strong enough for years to justify these huge build-outs, especially since Oracle’s future growth is tied to a small number of very large customers.

Source: NYTimes