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Oracle ( ORCL ) is down 56% of its 52-week high. Jefferies cut price target to $320 from $400 after widening with savings OpenAI In Stargate’s $500B project. Nvidia $150M Issued; Meta eye rent; Microsoft is a partner
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Oracle and OpenAI’s data center development plans have stalled after negotiations over funding terms and OpenAI’s development accounting requirements, although the original agreement remains in place.
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last year, Oracle (NYSE:ORCL) has announced a $500 billion data center project in Texas that has signed on as a partner in major AI stocks. The Stargate initiative was positioned as a transformative leap for the company’s cloud business, promising to power next-generation AI workloads and deliver massive revenue growth.
While questions have been raised about Oracle’s finances and the debt it is considering to bankroll the massive build, Wall Street widely sees it as a potentially huge growth opportunity in the artificial intelligence infrastructure race. The project looks set to cement Oracle’s role alongside tech giants pursuing productivity AI dominance.
Still one Bloomberg A report yesterday called the health of the project into question by calling plans for Oracle OpenAI Deployed to expand the project.
READ: The analyst named NVIDIA in 2010 Just naming his top 10 AI stocks
A Bloomberg report provided the first crack at the Stargate narrative. It revealed that Oracle and OpenAI are quietly scrapping tentative plans to lease a major expansion at their 1,000-acre AI data center in Abilene, Tex. Site created by — Crusoe Energy And last year at the White House with President Donald Trump publicly unveiled — billed as the epicenter of the AI computing boom. Negotiations reportedly fell over financing terms and OpenAI’s advanced computing requirements, ultimately leading both sides to walk away from excess capacity.
Importantly, the original July contract for Oracle to build 4.5 gigawatts of dedicated data center capacity for OpenAI remains intact and on schedule. Construction continues on the Abilene campus, with many sections already up and running Nvidia (NASDAQ: NVDA ) AI Semiconductors. Still, the shelf extension made for an immediate opening Meta platforms (NASDAQ: META ) to step in as a potential tenant, facilitating active negotiations with Nvidia and even posting a $150 million deposit with Cruso.
While the report falls short of declaring the entire project at risk, the news highlights the dangers of implementing this multibillion-dollar AI infrastructure bet. Oracle has committed large capital expenditures and assumed significant operating lease obligations to finance data center growth. Any sign of softening demand or shifting shareholder priorities could quickly unnerve investors who were already suspicious of the company’s profitability profile. The market’s immediate reaction was telling: Oracle shares gave up earlier gains, pulling down related AI infrastructure names as well.
CNBC quickly followed up with its own reporting, citing sources who insisted that the massive Stargate project remains firmly on track. Eight data center sites are currently under construction and are proceeding according to plan, according to people briefed on the matter. While there were earlier internal discussions about expanding beyond these eight sites, such hopes are no longer “on the cards,” at least in the near term. The CNBC segment emphasized that the shelf extension reflects a practical review rather than any fundamental breakdown.
The network also identified a key vulnerability: Oracle’s over-reliance on OpenAI. The AI leader has become one of the company’s most important cloud customers, and any weakness in that relationship sends immediate shocks through Oracle’s valuation. Because much of the narrative of Oracle’s future growth is tied to the AI hyperscale, the stock remains sensitive to headlines including OpenAI, Microsoft (NASDAQ: MSFT ), or other major shareholders. CNBC’s sources effectively allayed fears of a total cancellation but did little to allay concerns about the limited and heightened financial risk.
Project Stargate looks like nothing has changed about its development, just that it won’t get any bigger, at least not now. Nevertheless, Wall Street reacted immediately Jeffries Oracle cut its price target to $320 per share from $400, although it reiterated its buy rating.
Oracle stock remains 56% off its 52-week high as concerns remain high about its balance sheet and ballooning operating lease commitments. While there’s an opportunity to cash in on this bloated backlog, free cash flow can remain negative for years if demand slows or time lags, making the stock only suitable for investors who can tolerate volatility and high risk.
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