Oracle’s AI Expansion Hits Snag As Key Investor Pulls Back: Report

• Blue Owl had been negotiating both equity investment and debt arrangements for the planned 1-gigawatt facility serving OpenAI.
• Oracle has heavily invested in AI data centers while increasing its debt, which now totals roughly $105 billion.
• Oracle’s debt-to-equity ratio, an important indicator of financial stability, stands at 4.3.

Oracle Corp. (ORCL) reportedly faces a setback in its AI data center expansion as its major funding partner, Blue Owl Capital, withdrew from a $10 billion investment for a new facility in Saline Township, Michigan. 

According to the Financial Times report, the withdrawal comes amid growing concerns over Oracle’s rising debt and rapid spending on artificial intelligence infrastructure.

Funding Uncertainty

Blue Owl had been negotiating both equity investment and debt arrangements for the planned 1-gigawatt facility serving OpenAI. However, discussions stalled, leaving the project’s financing in limbo, according to the report. 

The situation highlights growing pressure on Oracle’s AI infrastructure strategy. According to the report, the company has heavily invested in AI data centers while increasing its debt, which now totals roughly $105 billion, up from $78 billion last year.

Oracle stock traded over 1% lower in Wednesday’s premarket. On Stocktwits, retail sentiment around the stock remained in ‘extremely bullish’ territory amid ‘extremely high’ message volume levels. 

On December 12, a Bloomberg report suggested that the completion of certain data centers for Oracle’s Project Stargate partner, OpenAI, has been delayed from 2027 to 2028. Blue Owl has played a crucial role in Oracle’s previous projects, including $15 billion in Abilene, Texas, and $18 billion in New Mexico, often investing its own equity and raising debt through partners.

Debt And Expenditure 

In its recent second-quarter (Q2) earnings, Oracle reported revenue of $16.1 billion, below the $16.19 billion consensus estimate from analysts, according to Fiscal AI data.

Oracle’s debt-to-equity ratio, an important indicator of financial stability, stands at 4.3, indicating the company carries about $4 of debt for every $1 of equity. 

Analysts pointed to a timing mismatch between Oracle’s AI buildout expenses and revenue conversion. While the company’s cloud infrastructure revenue grew 68% year-on-year to $4.1 billion, its capital expenditure rose to $12 billion.

ORCL stock has gained over 13% year-to-date.

Also See: Micron Stock In Spotlight As Investors Expect Strong Memory Market To Boost Earnings: 'AI Memory Demand Isn't Fading'

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