Oracle (ORCL, Financial) is playing a crucial role in the Stargate project, reinforcing BNP Paribas' belief that hyperscale cloud providers are among the best channels for investing in the AI boom. OpenAI plans to lease 4.5 gigawatts of data center capacity from Oracle for this project, including an increase in its Texas Abilene data center capacity from 1.2 to 2 gigawatts. This underscores the importance of hyperscale cloud providers in the AI era.
Due to their pivotal roles in AI infrastructure, BNP Paribas has given an "outperform" rating to Microsoft (MSFT), Amazon (AMZN), and Oracle. The bank estimates that providing 4.5 gigawatts for the Stargate project could generate annual revenues between $30 billion and $60 billion, depending on the hourly rental price per GPU. However, it remains unclear if Oracle will fund the entire construction or if Stargate's partners will contribute financially. The estimated investment required for building the 4.5 gigawatts capacity ranges from $180 billion to $225 billion.
BNP Paribas analysts noted in an investor report that the agreement might indicate the Stargate project's imminent formation or that renegotiations between Microsoft and OpenAI are nearing completion. This could be a significant catalyst for Microsoft, as investors might start viewing OpenAI as an asset rather than a liability, potentially integrating OpenAI's valuation into Microsoft's overall valuation. Moreover, if Microsoft continues to provide all inference services for OpenAI, Azure's future revenue potential could significantly increase. OpenAI aims to achieve $125 billion in revenue by 2029.
