Blue Owl Withdraws from $10 Billion Oracle Data Center Deal

Oracle Corporation’s ambitious plans for a new data center have suffered a significant setback. Blue Owl Capital, Oracle’s primary partner for its largest data center projects, has decided not to fund a proposed $10 billion deal to construct a facility in Saline Township, Michigan. This decision comes as concerns grow over Oracle’s escalating debt levels and its substantial investments in artificial intelligence.

Negotiations between Blue Owl and Oracle regarding the planned 1-gigawatt data center, which is intended to support OpenAI’s operations, have reportedly broken down. A source indicated that Blue Owl found the existing lease agreements for the Michigan project less favorable compared to previous deals it had structured with Oracle.

The impact of this news was immediately felt in the stock market, with Oracle’s shares declining nearly 4 percent during morning trading. Following the release of its quarterly results, Oracle’s stock has plummeted more than 15 percent, equating to a loss of approximately $69 billion in market value as of December 11. Investors are increasingly questioning how quickly Oracle’s significant financial commitments to AI will yield returns.

Oracle announced the Saline Township data center campus in October 2023 as part of a broader initiative, dubbed “Stargate,” aimed at expanding the United States’ AI infrastructure capabilities. Despite previous reports suggesting that labor and material shortages might delay the project, Oracle publicly refuted these claims last week.

Blue Owl Capital has been instrumental in funding Oracle’s largest data center projects in the United States, leveraging both its own capital and raising billions in debt. According to a report from the Financial Times, Oracle has not yet secured a new backer following Blue Owl’s withdrawal. The Blackstone Group has held discussions regarding a potential financial partnership but has yet to confirm any investment in Oracle’s data center initiative.

As Oracle navigates this turbulent period, the future of its AI infrastructure projects remains uncertain. The company has not responded to requests for comment regarding the current situation.