Oracle's AI Data Setback

What happened

Blue Owl Capital withdrew a $10 billion investment for Oracle's planned one-gigawatt data centre project in Michigan, intended to support OpenAI. This withdrawal impacts Oracle's increasing debt and rapid AI infrastructure expenditure, leading to a decline in Oracle's shares. Oracle's first data centre for OpenAI in Abilene, Texas, remains on schedule, despite broader delays in other data centre completions due to skilled labour and material shortages. Oracle, which has a $300 billion computing power contract with OpenAI, anticipates capital expenditure to reach $50 billion in fiscal year 2026.

Why it matters

This development introduces a significant operational constraint for Oracle, creating a funding gap for a critical one-gigawatt data centre intended for OpenAI, directly impacting the delivery of contracted computing power. Procurement and finance teams within Oracle now face increased due diligence requirements for securing alternative funding and managing heightened debt levels. Simultaneously, project management teams must mitigate delays caused by external funding withdrawal and persistent supply chain issues, increasing exposure to project timeline overruns and potential penalties for non-delivery of contracted capacity to OpenAI.