【AI + Computing Power】Oracle and OpenAI suddenly cancel AI factory expansion plans — related to Jensen Huang and Amazon?

Bloomberg reported on Saturday that Oracle (NYSE: ORCL) and OpenAI have canceled plans to expand their flagship AI data center in Texas due to a deadlock in financing negotiations. The underlying reason may be related to OpenAI’s recent $110 billion funding round.

Nvidia CEO Jensen Huang stated at the Morgan Stanley Technology Conference that he proposed “three vectors of growth” (referring to three directions driving significant increases in Nvidia’s computing demand): First, to promote Amazon (NASDAQ: AMZN) AWS to ensure OpenAI gains more capacity. Second, Anthropic is actively expanding their capacity on AWS and Azure. Third, a new laboratory called MSL built on Meta. “Our demand forecast has gone from very high to even higher.”

Some users quoted Huang’s remarks on X (formerly Twitter), and OpenAI CEO Sam Altman responded, “Thank you very much to Jensen Huang for working to expand Nvidia’s computing capacity on AWS!” However, Altman did not comment on the news that “Oracle and OpenAI canceled the Texas AI factory expansion plan,” which suggests the event is credible.

【AI + NVDA】Huang’s three vectors of growth

AI + Data Centers | Bloomberg: Oracle and OpenAI cancel Texas AI factory expansion, Meta steps in

In summary, based on these two pieces of news, OpenAI’s new AI factory has shifted from Oracle to Amazon.

OpenAI recently completed a new funding round of $110 billion, with Amazon leading a $50 billion investment. The initial investment was $15 billion, with an additional $35 billion to be injected in the coming months (upon meeting certain conditions). Notably, this “investment” is actually for setting up AI data centers for OpenAI. Amazon would not “support” Oracle, which explains why OpenAI is switching to its own branded products. This also accounts for the deadlock in financing negotiations with Oracle, which does not hold equity in OpenAI.

In simple terms, chip company Nvidia will not co-invest with AMD (NASDAQ: AMD), and Amazon, which is developing AI factories simultaneously, will not co-invest with Oracle. However, most of Oracle’s “unfulfilled contracts” come from OpenAI. Reportedly, out of the $455 billion involved, OpenAI accounts for $300 billion, meaning Oracle has lost business to OpenAI. This does not affect OpenAI, which continues to have Amazon’s support for expanding computing power. Whether Oracle is affected depends on whether Huang can help Meta take over.