Oracle shares jump over 5% on potential $10 billion cloud deal with Elon Musk’s xAI

Oracle Corp. (NYSE:ORCL) saw its shares rise by as much as 5.3% following a report from The Information that the company is nearing a $10 billion cloud contract with Elon Musk’s artificial intelligence startup, xAI.

This development marks a significant step for Oracle in the competitive cloud infrastructure market.

Oracle Chairman Ellison's previous announcement

Last September, Oracle Chairman Larry Ellison announced that the company had secured a deal to provide cloud infrastructure for xAI to train its artificial intelligence models.

At that time, Ellison did not disclose the contract's value or duration.

However, the latest reports indicate that the deal is set to span five years and is valued at $10 billion.

Similar to OpenAI-Anthorpic deal

Insiders familiar with the matter have compared the anticipated agreement to the existing deal between OpenAI and Anthorpic.

If finalized, the contract would position xAI as one of Oracle's largest clients, significantly boosting Oracle's presence in the AI cloud services sector.

xAI funding and future prospects

The news of the potential contract comes as xAI is concluding a $6 billion equity funding round, which is expected to help cover the costs associated with the cloud services.

This funding round underscores the growing financial support and market interest in xAI's AI initiatives and Oracle's cloud infrastructure capabilities.

Deal's impact on Oracle's market position

Securing a deal of this magnitude with a high-profile client like xAI would reinforce Oracle's market position and highlight its competitive edge in providing cloud solutions for AI development.

The potential partnership reflects the increasing demand for robust cloud infrastructure to support advanced AI technologies.