by Akash Sriram
Dec 17 (Reuters) – Oracle’s largest data center partner Blue Owl Capital will not fund a $10 billion deal to build its next facility, a source said on Wednesday, amid growing concerns about the cloud computing company’s mounting debt and spending on artificial intelligence.
Discussions between Blue Owl and lenders and Oracle over plans to invest in a 1-gigawatt data center in the town of Saline, Mich., designed to serve OpenAI, fell apart after talks reached an impasse, the person said.
A key issue is that Blue Owl views the existing lease for the Michigan project as less favorable than leases it helped structure in other deals with Oracle, the person said.
Oracle shares fell nearly 4% in early trading. The cloud computing company’s shares have fallen more than 15% since its quarterly earnings report last week.
A selloff wiped out about $69 billion from Oracle’s market value on Dec. 11 as its huge spending and weak forecasts cast doubt on how quickly big bets on artificial intelligence will pay off.
Oracle did not immediately respond to a request for comment.
Oracle, OpenAI and related digital companies announced the Saline Township data center campus in October as part of their Stargate initiative to expand U.S. artificial intelligence infrastructure capacity.
Last week, Oracle denied media reports that it was delaying the construction of OpenAI-related data centers due to labor and material shortages.
Blue Owl Capital is a major backer of Oracle’s largest data center project in the United States, investing billions of its own money and raising debt to build the facilities, according to the Financial Times, which first reported the development.
Oracle has not yet signed an agreement with the new backer, the report said.
Blackstone has reportedly been in talks to step in as a financial partner but has not yet committed to investing in Oracle’s data centers.
(Reporting by Jaspreet Singh and Akash Sriram in Bengaluru; Editing by Tasim Zahid)
