Oracle Data Center Funding Clouded by Blue Owl Exit
Oracle data center funding drew scrutiny after Blue Owl pulled from a planned $10 billion AI facility, increasing focus on Oracle capex and leverage.
KEY TAKEAWAYS
- Blue Owl pulled out of talks to back a $10 billion Michigan AI data center.
- Oracle said the Michigan facility remains on schedule and is seeking alternative financing.
- Management indicated fiscal 2026 capex would run about $15 billion above earlier plans.
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Oracle data center funding drew new scrutiny on Dec. 17, 2025, after Blue Owl Capital opted not to back the planned $10 billion, 1-gigawatt Michigan AI facility, sharpening investor focus on Oracle Corporation’s rising capital expenditure and leverage.
Partner Withdrawal Raises Questions on Michigan Project
Blue Owl Capital, described as Oracle’s largest data-center investment partner, ended talks to provide equity and arrange debt financing for the Michigan facility after negotiations stalled. The project, intended to support OpenAI workloads as part of Oracle’s AI infrastructure expansion, now faces uncertain funding.
Oracle said the Michigan data center remains on schedule but confirmed it is no longer in funding discussions with Blue Owl and is seeking alternative financing sources.
AI Spending Drives Capital Expenditure and Backlog Growth
Oracle reported fiscal 2026 second-quarter results on Dec. 10, 2025, showing total revenues of $16.1 billion, up 14.0% year over year. Cloud revenues, combining infrastructure-as-a-service (IaaS) and software-as-a-service (SaaS), rose 34.0% to $8.6 billion, while cloud infrastructure (IaaS) revenue jumped 65.0% to $3.1 billion. The company highlighted heavy capital investment in AI-related cloud infrastructure.
Management indicated on the earnings call that fiscal 2026 capital spending will exceed earlier plans by about $15 billion, driven mainly by AI data-center construction. Remaining performance obligations, a measure of contracted but unrecognized revenue, increased to roughly $523 billion, with a significant portion tied to a concentrated group of large AI customers, including OpenAI.
Some reports linked the Michigan financing setback to concerns about Oracle’s rising debt and AI spending, citing total debt near $105 billion, up from about $78 billion year over year. These figures highlight the pressure on Oracle’s capital allocation as it balances large upfront investments with the timeline for converting backlog into cash flow.
