- Oracle shares dropped 5% after Blue Owl Capital chose not to finance a $10 billion data center project.
- The failed deal complicates Oracle‘s efforts to manage its $105 billion net debt, which could rise to $290 billion by 2028.
- Oracle posted $16.06 billion in revenue for its fiscal second quarter, slightly below analyst expectations.
- Capital expenditures surged to $12 billion, driven by the company’s AI investment plans.
- Investor concerns about increased AI spending affected other AI-related stocks, including NVIDIA and AMD.
Shares of Oracle (ORCL) declined by 5% on Wednesday after Blue Owl Capital, its largest data center partner, decided not to back a planned $10 billion investment in a 1-gigawatt data center in Saline Township, Michigan. The facility was intended to serve OpenAI, but discussions between Blue Owl, lenders, and Oracle stalled, and the deal will not move forward, according to sources speaking to the Financial Times.
This setback creates challenges for Oracle, which has a net debt of approximately $105 billion as of late November, including lease obligations. One year prior, the company’s net debt stood at around $78 billion. Morgan Stanley projects this figure could reach nearly $290 billion by 2028. Recently, Oracle issued $18 billion in bonds and is negotiating with multiple U.S. banks to secure an additional $38 billion in debt financing.
In the last five days, Oracle stock has fallen over 18%, influenced in part by its fiscal second-quarter earnings report released on Tuesday. The company reported $16.06 billion in revenue, a 14% increase from the previous year but slightly below the $16.21 billion forecast by analysts monitored by Bloomberg. Despite solid revenue growth, concerns arose from Oracle’s announcement of a significant AI spending plan.
Capital expenditures for the fiscal second quarter reached $12 billion, a significant increase from $4 billion in the same period last year and above the $8 billion analysts expected. This boost in spending, part of the company’s AI initiatives, pressured both its stock and bond prices, with shares dropping over 40% from their September peak.
The announcement also impacted other AI-related stocks, including Nvidia (NVDA) and AMD, which saw slight declines on Thursday. Analysts view these developments as a potential turning point for AI investments heading into 2026.
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