Oracle’s new leadership is standing in front of a $300 billion bet that could reshape the company’s future, or crush it. The dual CEOs, Mike Sicilia and Clay Magouyrk, are defending a massive AI push built on new data centers and an aggressive partnership with OpenAI, according to The Wall Street Journal. The pair says […]Oracle’s new leadership is standing in front of a $300 billion bet that could reshape the company’s future, or crush it. The dual CEOs, Mike Sicilia and Clay Magouyrk, are defending a massive AI push built on new data centers and an aggressive partnership with OpenAI, according to The Wall Street Journal. The pair says […]

Oracle ties OpenAI deal to data-center strategy

2025/10/16 01:05

Oracle’s new leadership is standing in front of a $300 billion bet that could reshape the company’s future, or crush it.

The dual CEOs, Mike Sicilia and Clay Magouyrk, are defending a massive AI push built on new data centers and an aggressive partnership with OpenAI, according to The Wall Street Journal.

The pair says this is about giving businesses real computing power, bundled software, and analytics that make artificial intelligence actually usable.

Sicilia, who led Oracle Industries before taking the top job last month, said the company is “really in a unique situation to deliver what we call applied AI,” explaining that this includes infrastructure, analytics, and enterprise applications.

Magouyrk, who previously ran Oracle’s cloud infrastructure arm, said the company’s new AI platform will tie all of that together. Their pitch comes as investors question whether this huge AI build-out is sustainable or just another bubble waiting to pop.

Oracle ties OpenAI deal to data-center strategy

Shares of Oracle jumped more than 40 percent last month after the company reported a surge of $317 billion in future contract revenue for the quarter ending August 31. Much of that came from its five-year, $300 billion deal with OpenAI, which executives insist will anchor the next phase of its cloud business.

But analysts are already uneasy. Sam Altman, OpenAI’s chief executive, has admitted the company won’t turn a profit until 2029, which makes Oracle’s dependence on that partnership look risky.

Moody’s warned last month that Oracle’s balance sheet could come under strain from the cost of its new AI data centers and its reliance on OpenAI to fill them. Earlier this month, Oracle stock dropped as much as 7.1 percent before bouncing back, following a report that margins on renting out Nvidia chips were razor-thin.

Still, both Sicilia and Magouyrk plan to defend the math when they meet investors at Thursday’s Investor Day, arguing that scaling will make the business profitable.

Magouyrk said, “Margins are the wrong way to look at the business. I understand the economics of each marginal unit and how this works out as it scales, and that actually ends up being a very profitable business.”

Balaji Abbabatulla, an analyst at Gartner, said Oracle’s playbook is to sell entire ecosystems of AI tools rather than single products. “They’re not going to be able to show clear returns if they don’t go for those large and multibillion-dollar deals,” he said.

That approach means combining AI infrastructure with databases, enterprise-resource-planning tools, and HR software so corporate clients can buy it all from one vendor.

Margins, inference, and debt weigh on investor faith

Another piece of Oracle’s plan is AI inference; the process of running models after they’re trained. Most infrastructure spending today goes into training, but inference is where customers actually use models and generate results.

Magouyrk said Oracle can let clients “do their inferencing right alongside their data with the best models.” He claimed usage could increase a thousandfold once customers adopt its new AI Data Platform.

Shawnna DelHierro, chief information officer at SoundHound AI, said her company already uses Oracle’s cloud to train and run models, handling over one billion queries per month. SoundHound also uses Oracle’s back-office software and picked the firm because it offered “a true partner” and “zero latency,” she said.

Still, many enterprises complain they haven’t seen quick returns from AI even as they pour money into it. Oracle has added more debt to stay ahead, issuing $18 billion in bonds in late September to fund its AI data-center build-out, including the massive Stargate project with OpenAI.

Magouyrk pushed back on fears about debt, saying that if you combine Oracle’s new contracts, revenue projections, and cash flow, the picture looks “much rosier.” He added that Oracle isn’t betting everything on one client. “Pretty much all of the big model providers use our cloud in one form or another,” he said. “You can’t get more than 100 percent of the Pokémon.”

If you're reading this, you’re already ahead. Stay there with our newsletter.

Disclaimer: The articles reposted on this site are sourced from public platforms and are provided for informational purposes only. They do not necessarily reflect the views of MEXC. All rights remain with the original authors. If you believe any content infringes on third-party rights, please contact service@support.mexc.com for removal. MEXC makes no guarantees regarding the accuracy, completeness, or timeliness of the content and is not responsible for any actions taken based on the information provided. The content does not constitute financial, legal, or other professional advice, nor should it be considered a recommendation or endorsement by MEXC.
Share Insights

You May Also Like

Crucial Delay: How Lack of Data Could Impact Fed Policy Adjustments

Crucial Delay: How Lack of Data Could Impact Fed Policy Adjustments

BitcoinWorld Crucial Delay: How Lack of Data Could Impact Fed Policy Adjustments The financial world is abuzz following Federal Reserve Chair Jerome Powell’s recent remarks, which highlight a significant challenge facing the central bank’s future Fed policy adjustments. A lack of reliable economic data, particularly employment indicators, stemming from the government shutdown, could force the Fed to pump the brakes on its planned policy shifts. This situation introduces a layer of uncertainty for markets and investors alike, as the central bank relies heavily on comprehensive data to guide its decisions. What’s Driving the Uncertainty in Fed Policy Adjustments? Jerome Powell explicitly stated that the recent government shutdown created a void in critical economic reporting. Key employment indicators, consumer sentiment surveys, and other vital statistics that typically inform the Federal Reserve’s understanding of the economy simply weren’t available. Without this complete picture, making informed decisions about interest rates or other monetary tools becomes incredibly difficult. The Federal Reserve operates on a data-dependent framework. This means every decision regarding Fed policy adjustments, such as whether to raise, lower, or maintain interest rates, is meticulously weighed against the latest economic performance data. When this data stream is interrupted, the foundation for policy decisions weakens, leading to potential delays. Why Are Comprehensive Economic Data Crucial for Monetary Policy? Think of the economy as a complex machine, and economic data as the dashboard gauges. The Fed needs to see these gauges clearly – unemployment rates, inflation figures, GDP growth, and wage increases – to know if the machine is running too hot or too cold. Without accurate readings, it’s like driving blindfolded. For instance, employment data offers insights into labor market health, consumer spending power, and potential inflationary pressures. If the Fed can’t accurately assess these factors, it risks making an adjustment that could either stifle growth unnecessarily or allow inflation to accelerate unchecked. This underscores the profound importance of timely and accurate information for effective monetary policy adjustments. Potential Challenges and Implications for Future Fed Policy Adjustments This data gap presents several challenges: Market Volatility: Uncertainty about the Fed’s next move can lead to increased volatility in financial markets, impacting everything from stock prices to bond yields. Investor Confidence: A less predictable monetary policy environment can erode investor confidence, potentially affecting investment and growth. Delayed Decisions: The most direct impact is the potential for the Fed to slow the pace of its Fed policy adjustments. This could mean interest rate decisions are postponed or approached with greater caution. Economic Forecasting: Other economic forecasters and businesses also rely on this data, making their own planning more difficult. Powell himself acknowledged this, expressing a strong desire to have more comprehensive data available by December. This timeline suggests that the central bank is actively waiting for clarity before committing to its next steps. Looking Ahead: What Does This Mean for Future Fed Policy Adjustments? The immediate takeaway is patience. The Federal Reserve will likely adopt a more cautious stance, preferring to wait for a clearer economic picture before making any significant moves. This doesn’t necessarily mean a halt to all Fed policy adjustments, but rather a more deliberate and potentially slower approach. For individuals and businesses, this period calls for close attention to upcoming economic reports and statements from the Federal Reserve. Understanding the data the Fed is watching will be key to anticipating their next actions. The central bank’s commitment to data-driven decisions remains paramount, even when the data itself is temporarily elusive. In conclusion, Jerome Powell’s candid admission underscores the critical role of robust economic data in shaping monetary policy. The temporary void created by the government shutdown could indeed slow the pace of Fed policy adjustments, introducing a period of heightened caution and data dependency for the central bank. As we move forward, the availability of comprehensive economic indicators will be the guiding light for the Federal Reserve’s crucial decisions, influencing the stability and growth of the broader economy. Frequently Asked Questions (FAQs) Q1: Why is a lack of data so problematic for the Federal Reserve? The Federal Reserve relies on accurate and timely economic data to assess the health of the economy and make informed decisions about interest rates and other monetary tools. Without this data, their ability to make effective Fed policy adjustments is severely hampered, increasing the risk of missteps. Q2: What specific types of data are most important for the Fed? Key data points include employment indicators (like unemployment rates and job growth), inflation figures (Consumer Price Index), GDP growth, retail sales, and manufacturing output. These provide a comprehensive view of economic activity and inflationary pressures, guiding monetary policy adjustments. Q3: How might this delay in policy adjustments affect the average person? A delay in Fed policy adjustments could lead to increased market volatility, impacting investments and retirement savings. It might also prolong uncertainty about future interest rates, which can affect borrowing costs for mortgages, car loans, and credit cards. Q4: When does Jerome Powell expect to have sufficient data? Jerome Powell expressed hope that more comprehensive data would be available by December. This suggests that the central bank is anticipating a clearer economic picture towards the end of the year before making further Fed policy adjustments. Q5: Does this mean the Fed won’t make any policy changes until December? Not necessarily. It means the Fed will likely adopt a more cautious and deliberate approach to any Fed policy adjustments. While significant shifts might be postponed, the central bank will continue to monitor available information and could make minor adjustments if deemed necessary, albeit with greater prudence. Did you find this analysis helpful in understanding the complexities of monetary policy? Share this article with your network on social media to keep others informed about the critical factors influencing the Federal Reserve’s decisions! To learn more about the latest explore our article on key developments shaping global economic trends and their impact on future market stability. This post Crucial Delay: How Lack of Data Could Impact Fed Policy Adjustments first appeared on BitcoinWorld.
Share
Coinstats2025/10/30 03:40