The arrangement, finalised in May 2025 after months of negotiations, went live this quarter, making OpenAI one of Google Cloud’s biggest customers to date.

Sundar Pichai, CEO of Google, confirmed the deal during Alphabet’s second-quarter earnings call, stating:

“We are very excited to be partnering with them on Google Cloud. Google Cloud is an open platform, and we have a strong history of supporting great companies, startups, AI labs, etc. So super excited about our partnership there on the cloud side, and we look forward to investing more in that relationship and growing that.”

OpenAI’s demand for compute has surged to historic levels, with projections indicating over one million GPUs will be online by the end of 2025. Its longer-term goal involves scaling to 100 million GPUs over the next decade. 

This explosive growth has outpaced Microsoft Azure’s capacity, the company’s primary cloud partner, forcing OpenAI to look elsewhere.

Google Cloud, once kept at arm’s length by OpenAI due to its rivalry with Microsoft and shared ambitions in AI, now enters the scene with a compelling offer: access to Nvidia’s top-tier H100 and GB200 GPUs, custom-built TPUs, and a mature infrastructure trusted by leading AI research outfits including Anthropic, Fei-Fei Li’s World Labs, and Ilya Sutskever’s Safe Superintelligence.

The exclusivity OpenAI once held with Microsoft ended quietly in January 2025. Under the new “right of first refusal” framework, OpenAI gained the freedom to diversify its backend. 

The company’s operations now span data centres in Oregon, Iowa, Frankfurt, Milan, Singapore, and Tokyo, optimised for low-latency inference and strict sovereign compliance. Workloads are split across Azure and Google Cloud using orchestration tools like Kubernetes, Anthos, and Istio.

This development reveals the pressure OpenAI faces in scaling its services while maintaining uptime, responsiveness, and sustainability commitments. Both firms have pledged to power AI workloads with 100% carbon-free energy, and will publish energy transparency metrics in line with grid-optimised strategies.

While OpenAI remains the most direct threat to Google’s crown jewel, Search, the economic logic behind this partnership is clear. Google Cloud posted a $13.62 billion revenue haul in Q2 2025, up 32% year-on-year. 

Much of that growth comes from AI workloads, prompting Alphabet to raise its capital expenditure target for the year to $85 billion, noting “strong and growing demand” across both AI and cloud services.

Still, the optics are awkward. OpenAI’s ChatGPT product has chipped away at Google’s dominance in Search, forcing the tech giant to hasten development on its own generative AI offerings like Gemini. 

That chatbot now reaches 450 million monthly users, while AI Overviews on Search reportedly sees 2 billion monthly users. But the monetisation strategy behind those products is not well explained.

Some analysts are comparing this move to Google’s early relationship with Yahoo, when it quietly powered Yahoo Search in its early days, only to displace it as the internet’s front page. 

Hopefully, history will not repeat itself.

The project is part of the Stargate initiative, a $500 billion plan to deliver 10GW of data centre capacity over four years. 

This latest phase will increase Stargate’s total planned capacity to over 5GW, which OpenAI says will power more than 2 million chips, primarily Nvidia GB200s. The company stated: “We now expect to exceed our initial commitment thanks to strong momentum with partners including Oracle and SoftBank.”

Interestingly, OpenAI isn’t building the data centres itself. Instead, it has signed a $30 billion multi-year leasing agreement with Oracle, which will own and operate the infrastructure. 

Oracle will supply and manage the hardware, while OpenAI focuses on AI model development and deployment. This is a transition from earlier plans that saw SoftBank involved more directly in construction efforts.

In practical terms, the 4.5GW expansion represents about 25% of total operational data centre capacity in the U.S., noting the sheer scale of the Stargate project. The first site, Stargate I in Abilene, Texas, is already partially live, with Nvidia racks installed and initial workloads running.

But the Abilene site has also led to environmental concerns. Its $500 million natural gas plant, built to power the facility, has been objected due to pollution risks and potential health hazards to nearby communities.

On the political aspect, Stargate enjoys direct backing from the U.S. government. Former President Donald Trump unveiled the project at the White House in January 2025 as part of efforts to outpace China in AI development. To accelerate progress, the White House declared a national energy emergency earlier this year, fast-tracking permits for fossil fuel and nuclear plants to support high-energy AI campuses.

Despite the high-profile nature of the project, only $50 billion of the promised $500 billion investment has been raised so far. Immediate deployment of $100 billion has reportedly stalled. Internal disputes between OpenAI and SoftBank over site locations and governance have also emerged, leading to a scaled-down plan to build a smaller data centre in Ohio by the end of 2025.

In January, xAI owner Elon Musk dismissed the venture, stating: “They don’t actually have the money.”

Again, SoftBank and OpenAI are said to be pursuing different visions for Stargate, slowing progress. While OpenAI’s partnership with Oracle accelerates construction, its collaboration with SoftBank has shifted towards site assessments and infrastructure design innovations.

Beyond Stargate, OpenAI continues to diversify its infrastructure partnerships, working with CoreWeave, Crusoe, Cisco, and G42 in the UAE. Its new ‘OpenAI for Countries’ initiative is also helping governments build sovereign AI infrastructure and establish national AI investment funds.

For now, OpenAI predicts the construction and operation of the new 4.5GW capacity will generate over 100,000 jobs across construction and operations in the U.S. alone. Many of these roles, the company says, will be filled by skilled tradespeople, including electricians, equipment operators, and technicians, from over 20 states.

Nonetheless, funding is a concern as timelines are slipping, and internal disagreements could yet derail the project’s long-term goals.