Oracle and OpenAI Scrap Texas AI Data Center Expansion Amid Stalled Talks
Oracle and OpenAI have officially abandoned their plans to expand the flagship artificial intelligence data center in Abilene, Texas. This key site was part of the much-publicized Stargate initiative, but negotiations over financing and OpenAI's frequently changing capacity requirements dragged on for months without reaching a resolution, according to a Bloomberg report published on Thursday.
Public Assurance Fails to Calm Investor Concerns
The collapse of this expansion plan comes after Oracle spent weeks publicly insisting that its relationship with OpenAI remained strong and unshaken. In early February, the company posted on social media platform X that a stalled investment deal involving Nvidia and OpenAI had "zero impact" on its financial ties with Sam Altman's company. However, rather than reassuring investors, this statement triggered a nearly 3% decline in Oracle's stock price. Venture capitalist Alex Kolicich described the language used in the post as "literally bank-run language," indicating it raised more alarms than it soothed.
Ambitious Expansion Plans Hit Multiple Roadblocks
Oracle, Crusoe Energy Systems, and OpenAI had been engaged in negotiations since mid-2025 to nearly double the capacity of the Abilene campus from 1.2 gigawatts to approximately 2 gigawatts. The Abilene site, developed by Crusoe, represents one of the highest-profile data center projects announced under the Stargate initiative. However, the talks repeatedly stretched out, complicated by significant financing hurdles and what Bloomberg characterized as OpenAI's "often-changing demand forecasting."
It is important to note that the 1,000-acre site is not entirely dead. Several buildings are already operational, and Oracle's broader agreement with OpenAI to develop 4.5 gigawatts of data center capacity across multiple locations in the United States remains intact, according to reports from both Bloomberg and Reuters. However, the specific expansion project in Abilene is now definitively off the table. The collapse of these talks has reportedly created an opportunity for Meta to step in and consider leasing the expansion site from Crusoe.
Reliability Issues Strain Oracle-Crusoe Partnership
Bloomberg also reported that relations between Oracle and Crusoe have been strained by reliability problems at the Abilene site. Earlier this year, data center buildings went offline for several days after winter weather adversely affected some of the liquid cooling machinery, highlighting operational vulnerabilities.
In an official statement, Oracle said it is "very proud of our relationship and our progress in bringing capacity online"—notably making no mention of OpenAI in this context. Crusoe, for its part, stated that the two companies are "operating in lockstep" to deliver one of the world's largest AI factories in Abilene.
Broader Financial Challenges for Oracle
The broader financial picture for Oracle remains challenging. The company has accumulated over $100 billion in debt while building out its AI infrastructure, and its stock has lost roughly half its value since peaking in September 2025—erasing approximately $463 billion in market capitalization. Investment bank TD Cowen flagged this week that Oracle may cut between 20,000 and 30,000 jobs to free up cash, and S&P Global has placed the company's credit rating on negative watch.
An earlier report by The Information revealed that the Stargate joint venture itself has been largely idle, with no staff hired, no ground broken, and OpenAI routing around it with bilateral deals. Oracle has not publicly commented on the layoff reports or its ongoing financing difficulties.
