Oracle faces setback in Michigan AI project
Oracle and Blue Owl Capital have ended their partnership to develop artificial intelligence data centers, according to reports.
The joint ventures were intended to build multiple AI data centers, including a planned one-gigawatt facility in Michigan, but discussions on the project did not move forward.
Oracle shares fell roughly 4.4% in early trading following the news. A company spokesperson clarified that the report was inaccurate, explaining that Oracle’s development partner, Related Digital, chose a different equity partner after a competitive review.
Negotiations for the equity deal are continuing according to plan, the spokesperson said.
The split comes as Oracle aggressively expands its AI cloud infrastructure to support its ongoing work with OpenAI. The tech giant has been raising significant capital to fund its growth, issuing $18 billion in new debt in September and bringing total debt to $111 billion by November, up from $89 billion a year earlier.
The company also reported $272 billion in lease obligations, a $152 billion increase over three months.
Oracle’s rapid expansion has strained its finances, resulting in a free cash flow loss of $13 billion over the past year, with $10 billion of that occurring in the most recent quarter.
The financial pressures have contributed to a steep decline in the company’s stock, which is down more than 40% from its all-time high reached in September. Bond prices have also weakened amid the changes to Oracle’s balance sheet.
Industry analysts say Oracle’s moves reflect the high costs and competitive pressures in the AI cloud market. The split with Blue Owl highlights the challenges of funding large-scale data center projects even for established technology companies.
Oracle continues to pursue partnerships and investments to accelerate its AI infrastructure, signaling that its strategy to support AI workloads remains a top priority despite short-term financial strains.
The outcome of Oracle’s AI expansion is closely watched by investors and industry observers, as it could shape the company’s position in the rapidly growing AI cloud sector.
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