Oracle’s stock declined sharply following reports that a major funding partner withdrew from a landmark data center deal. The stalled negotiations cast doubt on how the tech giant will finance its aggressive AI infrastructure expansion. Analysts highlight growing scrutiny over the debt-driven spending spree in the AI sector, particularly for companies like Oracle.

Oracle Corporation faces a significant hurdle in its AI infrastructure race after private credit giant Blue Owl Capital exited talks to finance a planned $10 billion data center campus in Michigan. The breakdown in negotiations, first reported by the Financial Times, triggered a nearly 5% drop in Oracle’s stock (ORCL) as investors reassessed the company’s strategy for funding its massive capital expenditure on artificial intelligence computing capacity.

This development places the future of the Michigan facility into question, a project central to Oracle’s cloud and AI competitiveness. While Oracle stated that final financing negotiations remain “on schedule” with a different, unnamed equity partner, the loss of Blue Owl is a substantial blow. Blue Owl has been Oracle’s primary data center partner, instrumental in developing its campuses in Texas and New Mexico, and is a key financier in the broader AI infrastructure boom, including a major facility for Meta.

The situation underscores a critical debate on Wall Street regarding the financial engineering behind the AI construction frenzy. Companies are increasingly using off-balance-sheet joint ventures and special purpose vehicles, alongside large corporate bond issuances, to fund these costly projects without fully reflecting the debt on their own books. Oracle draws particular analyst concern because, unlike cloud rivals with massive internal cash flows, it is more reliant on such external financing to bankroll its ambitious $10 billion AI data center build-out, intensifying scrutiny over its balance sheet and long-term debt strategy.