Oracle has officially pushed back against a narrative that could undermine confidence in its massive AI infrastructure build-out.
Last week, a Bloomberg report claimed that Oracle and its key partner, OpenAI, had “scrapped” plans to expand their flagship data center campus in Abilene, Texas. This news caused Oracle's stock to dip, as it cast doubt on the company's ability to meet its huge commitments. However, Oracle issued a strong denial, stating that media claims were false, two buildings are already live, and the rest of the campus remains on track. This reframes the issue as a potential misunderstanding rather than a project failure.
So, what's really going on? It seems both stories might hold a piece of the truth. The core of the disagreement appears to be about scope. Oracle’s denial focuses on the certainty of the initial phase of the Abilene project, which involves constructing a 1.2GW campus. Multiple reports from late 2025 confirm that construction was well underway and parts of the facility were already operational.
On the other hand, the Bloomberg report likely refers to a potential second phase of expansion at the same site. Talks for this next stage may have stalled due to complex factors. First, there are financing and capital efficiency concerns, as Oracle plans to raise up to $50 billion in 2026 to fund its AI ambitions. Second, OpenAI’s own strategy involves diversifying its data center locations across the U.S. to mitigate risks and manage energy costs, reducing the need to concentrate all its expansion in Abilene.
Several external pressures also add to the complexity. These include supply chain constraints, labor shortages, and tightening grid regulations from Texas's power operator, ERCOT, which makes large-scale energy connections more challenging. In this context, pausing a secondary expansion while focusing on completing the primary build-out and diversifying to other locations is a logical business decision. The market will now be watching Oracle's upcoming Q3 earnings call on March 10 for concrete details on its capacity delivery and capital expenditure plans.
- OCI (Oracle Cloud Infrastructure): Oracle's suite of cloud computing services that provides computing, storage, and networking capabilities over the internet.
- RPO (Remaining Performance Obligations): A metric representing the total amount of contracted future revenue that a company has not yet recognized. It's an indicator of future sales.
- ERCOT (Electric Reliability Council of Texas): The organization that manages the flow of electric power to more than 26 million Texas customers, representing about 90 percent of the state's electric load.