The Pentagon on Thursday announced a contract with Oracle worth up to $7 billion over a decade for software use in on-premises data centers serving military branches, the U.S. intelligence community, and the Coast Guard. The Department of Defense's chief information officer Kirsten Davies stated the agency is saving at least $441 million for taxpayers through improved procurement methods. Oracle shares rose about 3% in extended trading following the announcement, providing relief for the software maker whose stock has declined 38% this year amid investor concerns about AI's impact on traditional software businesses.
Pentagon Awards Oracle $7 Billion Contract for Military Software
The contract covers the use of Oracle software in on-premises data centers for branches of the military, the U.S. intelligence community, and the Coast Guard, according to a Pentagon statement. The Central Intelligence Agency was Oracle's first customer under this arrangement.
Kirsten Davies, the Department of Defense's chief information officer, said in the release that the agency is saving at least $441 million for taxpayers "by fundamentally improving how we procure on-premises Oracle capabilities."
Earlier this week, Defense Secretary Pete Hegseth estimated that the war in Iran, which began in February, has cost the U.S. $37.5 billion.
Larry Ellison's Political Ties to Trump Administration
Oracle co-founder Larry Ellison has long been a supporter of President Donald Trump, reportedly contributing $45 million to a nonprofit backing Trump's 2024 presidential campaign.
Ellison was among the first guests to appear in the White House during Trump's second term, announcing plans for Stargate artificial intelligence data centers in the U.S. Trump supported Oracle taking a stake in TikTok's U.S. business, and in May, the Defense Department announced agreements with Oracle and other tech companies around AI deployments in classified networks.
Oracle Stock Rises 3% After Contract Announcement
Oracle shares are down 38% this year, as investors have grown concerned that AI could hurt growth prospects for software incumbents. The company is also racking up tens of billions of dollars in debt to build out AI data centers.
The stock rose about 3% in extended trading following the Pentagon contract announcement on Thursday.
Oracle said in June that quarterly software revenue declined 2% from a year earlier, though the company's database software is widely used inside large companies. Cloud revenue climbed 47% as the company rushes to supply AI computing power to OpenAI and other clients.
FAQ
What did the Pentagon announce on Thursday regarding Oracle?
The Pentagon announced a contract with Oracle worth up to $7 billion over a decade for software use in on-premises data centers serving military branches, the U.S. intelligence community, and the Coast Guard.
How much is the Department of Defense saving through this Oracle contract?
According to DOD chief information officer Kirsten Davies, the agency is saving at least $441 million for taxpayers by fundamentally improving how it procures on-premises Oracle capabilities.
How did Oracle's stock react to the Pentagon contract announcement?
Oracle shares rose about 3% in extended trading following the contract announcement on Thursday, despite being down 38% for the year overall.
