Oracle Stock Falls After Report on AI Data-Center Funding Talks

Oracle and Blue Owl have ended their partnership to build AI data centers (Justin Sullivan/Getty Images)

Key Points

• Oracle and Blue Owl ended their partnership to build AI data centers, with talks for a one gigawatt Michigan facility falling apart.
• Oracle’s stock declined approximately 2% following the news, while its bonds also saw price reductions.
• Oracle’s debt increased to $111 billion, with lease obligations rising by $152 billion in three months, and a $13 billion free cash loss.

Two companies at the center of the artificial-intelligence data center investment boom are parting ways, according to a report from the Financial Times. Oracle and alternative investments firm, Blue Owl Capital, had teamed up to create joint ventures to build AI data centers, but talks to fund a new one gigawatt data center in Michigan have fallen apart.

Oracle’s stock dipped on the news, falling about 4.4% in early trading.

“The FT story is incorrect,” Oracle spokesperson Michael Egbert said in an emailed statement. “Our development partner, Related Digital, selected the best equity partner from a competitive group of options, which in this instance was not Blue Owl. Final negotiations for their equity deal are moving forward on schedule and according to plan.”

Related Digital also denied that Blue Owl had dropped out, but rather had been outbid.

“This is an exceptional project that drew significant interest from equity partners,” said company spokesperson Natalie Ravitz. “We evaluated all of our options and selected our equity partner of choice for their unparalleled expertise in the space.”

This marks another chapter in Oracle’s attempt to quickly build out its AI cloud to fulfill a $300 billion contract with start-up OpenAI, a company that does not have $300 billion, or a clear path to getting it.

Oracle sold $18 billion in new debt in September, raising the total to $111 billion as of November, up from $89 billion the year before. The company also had $272 billion in lease obligations, up $152 billion in just three months.

The company also had a free-cash-flow loss of $13 billion in the last 12 months, $10 billion of that coming in the last quarter.

The reshaping of Oracle’s balance sheet and cash flows has taken a toll on the stock, which is down more than 40% from an all-time high reached in September, and its bond prices have declined.

Write to Adam Levine at adam.levine@barrons.com