Oracle data centre plan hit as Blue Owl walks from US$10 billion deal: source

Oracle’s largest data centre partner, Blue Owl Capital, will not provide funding for a US$10 billion deal to build its next facility, a source said on Wednesday (Dec 17), amid growing concerns about the cloud computing company’s rising debt and artificial intelligence spending.

Blue Owl’s discussions with lenders and Oracle regarding investment in a planned one-gigawatt data centre in Saline Township, Michigan, intended to serve OpenAI, have broken down after stalled negotiations, the person said.

A key issue was that Blue Owl viewed the existing leases for the Michigan project as less favourable than those it had helped structure in its other deals with Oracle, the person said.

Oracle shares were down nearly 4 per cent in morning trading. Since its quarterly results report last week, the cloud computing company’s shares have fallen more than 15 per cent.

The sell-off wiped around US$69 billion from Oracle’s market value on Dec 11, as its massive spending and weak forecasts raised doubts over how quickly the big bets on AI will pay off.

Oracle did not immediately respond to a request for comment.

Oracle, OpenAI, and Related Digital announced the Saline Township data centre campus in October as part of their “Stargate” push to expand US AI infrastructure capacity.

Last week, Oracle denied a media report that it was delaying OpenAI-related data centres due to labour and material shortages.

Blue Owl Capital has served as Oracle’s primary backer for its largest data centre projects in the US, investing its own money and raising billions of US dollars more in debt to build the facilities, according to a Financial Times report, which first reported the development.

Oracle has not signed a deal with a new backer, the report said.

Blackstone Group has held talks to step in as a financial partner but has not yet committed to invest in Oracle’s data centre, according to the report. REUTERS