Key investor pulls out…Oracle shock puts AI profitability back on the test

A key investor in U.S. software company Oracle has reportedly withdrawn from Oracle's $10 billion data center construction project, reigniting debate over AI profitability. The market has returned to caution as debt surged during tech firms' AI infrastructure expansion.

The Financial Times (FT) reported on the 17th (local time) that Oracle's investment partner Blue Owl Capital is unlikely to invest in a 1GW(gigawatt)-class data center project being built in Michigan. Blue Owl has been a key backer of Oracle's U.S. data center construction projects. It has mainly invested by establishing special-purpose entities to own data centers and lease them to Oracle.

According to the report, as Oracle's AI infrastructure spending soared, lenders raised concerns about Oracle's financial situation and demanded less favorable terms on interest rates and other conditions. From Blue Owl's perspective, it judged the project's profitability had deteriorated and pulled out.

As of the end of last month, Oracle's net debt was $105 billion, up 34.6% from a year earlier ($78 billion). Morgan Stanley projected Oracle's debt could swell to $290 billion by 2028. The size of long-term lease commitments related to data center and cloud capacity was $248 billion as of the end of last month, a 148% surge in three months.

Bloomberg reported that the political situation in the Michigan area, which could delay construction, also factored into concerns. Instead, Blue Owl continues to participate in other Oracle data center projects such as Abilene, Texas ($15 billion) and New Mexico ($18 billion).

This development has put the financing structures of hyperscalers (large-scale data center operators) competing in data center construction under scrutiny. Critics point to their reliance on private-equity funds rather than their own capital and to the long-term contract nature, meaning profits stabilize only years later—factors that could lead to future financial risks. As of the third quarter, the size of long-term lease commitments for Oracle, Microsoft, Amazon, Meta, Google and CoreWeave was $569 billion, up 53% from the previous quarter ($371.9 billion).

Oracle immediately rebutted the FT report, saying in a statement that the project is proceeding on schedule. However, in the New York market that day, Oracle's stock closed at $178.46, down 5.4% from the previous day. CoreWeave (-7.12%), Broadcom (-4.48%), NVIDIA (-3.81%) and other AI-related stocks broadly faced headwinds.

Reporter Han Kyung-je