Blue Owl talks stall as concerns grow over debt and AI spending
Oracle shares fell about 6% on Wednesday after a report suggested that discussions with Blue Owl Capital to help finance a massive $10 billion data center project in Michigan had stalled, raising fresh concerns about the cloud giant’s balance sheet and aggressive artificial intelligence investments. Although Oracle later disputed key elements of the report, the news rattled investors and added pressure to a stock already well off its highs.
According to the Financial Times, Blue Owl had been in talks with Oracle to back a 1-gigawatt data center in Saline Township, Michigan, designed to support OpenAI workloads. The report cited people familiar with the matter who said negotiations broke down due to worries over Oracle’s rising debt levels and the scale of its AI-related spending. The project is seen as strategically important as Oracle ramps up infrastructure to compete more aggressively in the cloud and AI markets.
Oracle pushed back on the narrative, stating that the data center project remains on track. Company spokesperson Michael Egbert said the development partner, Related Digital, selected another equity partner after a competitive process and that Blue Owl was not part of the final equity discussions. “Final negotiations for their equity deal are moving forward on schedule and according to plan,” Egbert said.
Still, the episode has drawn attention to Oracle’s growing financial commitments. Blackstone is reportedly in discussions to potentially replace Blue Owl as a financial partner for the Michigan project, though no agreement has been announced. Blue Owl has previously been a key investor in Oracle’s U.S. data center expansion, including a $15 billion facility in Abilene, Texas, and an $18 billion site in New Mexico.
Oracle’s balance sheet has expanded rapidly alongside its AI ambitions. As of Nov. 30, the company reported $248 billion in data center and cloud capacity lease commitments over the next 15 to 19 years, nearly 148% higher than in August. In September, Oracle raised $18 billion in new debt and announced a sweeping $300 billion partnership with OpenAI over five years.
By late November, Oracle owed more than $124 billion, including operating lease liabilities. With shares down roughly 46% from this year’s high, investors are increasingly scrutinizing whether Oracle’s AI-driven growth strategy can justify its rising leverage.
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