Oracle loses major backer for $10B OpenAI data center as AI spending fears grow

Oracle’s push to build one of the largest AI-focused data centers in the U.S. has hit a serious setback.

Blue Owl Capital, Oracle’s biggest data center financing partner, has stepped away from talks to fund a planned $10 billion facility in Saline Township, Michigan, Reuters reported, citing a source familiar with the discussions. The project was designed to support OpenAI workloads and formed part of the company’s high-profile “Stargate” initiative to boost U.S. AI infrastructure.

The breakdown followed weeks of discussions between Blue Owl, lenders, and Oracle. The core disagreement centered on lease terms tied to the Michigan site. Blue Owl viewed the structure as less favorable than arrangements it helped put together for earlier Oracle data center builds, the source said. With no agreement in place, negotiations stalled and eventually collapsed.

“Blue Owl’s discussions with lenders and Oracle regarding investment in a planned 1-gigawatt data center in Saline Township, Michigan, intended to serve OpenAI, have broken down after stalled negotiations,” Reuters reported, citing a source. 

Markets reacted quickly. Oracle shares slid nearly 4% in morning trading after the news surfaced. The stock has now fallen more than 15% since the company released its latest quarterly results. That selloff erased roughly $69 billion in market value on December 11, reflecting growing unease around Oracle’s heavy spending and muted outlook.

Investor anxiety has sharpened around the cost of Oracle’s AI ambitions. The company has committed billions to expand cloud capacity as demand from large AI customers accelerates. At the same time, rising debt levels are drawing closer scrutiny, especially as Wall Street weighs how long these investments will take to generate returns.

Blue Owl Walks Away From Oracle’s $10B AI Data Center Deal, Raising Debt Concerns

The Michigan campus was unveiled in October by Oracle, OpenAI, and Related Digital. It was billed as a cornerstone of the Stargate effort, a plan to build massive AI infrastructure across the United States. The Saline Township site alone was expected to deliver one gigawatt of capacity, placing it among the most energy-intensive data centers ever proposed.

Last week, Oracle pushed back against a separate media report claiming the company was delaying OpenAI-linked data centers due to labor and material shortages. The company said those claims were inaccurate. The funding impasse with Blue Owl adds a different layer of uncertainty, one tied to financing rather than construction logistics.

Blue Owl has played a central role in Oracle’s data center strategy. The firm has invested its own capital and helped raise billions in debt to support Oracle’s largest U.S. facilities, according to a Financial Times report that first disclosed the Michigan talks had fallen apart. Losing that backing leaves a noticeable gap.

Oracle has yet to secure a replacement partner for the project. Blackstone has held preliminary talks about stepping in, the report said, though no commitment has been made. For now, the future of the Michigan data center remains unresolved.

The episode underscores the tension facing cloud providers as they race to build AI capacity at an unprecedented scale. Demand continues to surge. Financing those builds is becoming harder as investors press for clearer paths to payback. For Oracle, the next moves will signal how far it can push its AI buildout without testing market patience.