How did OpenAI’s "Stargate" project bring down Oracle?

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OpenAI's "Stargate" AI data center project may be pushing Oracle into a financial predicament with potentially catastrophic consequences. Although the project debuted with grand ambitions, it is plagued by severely delayed engineering progress, hundreds of billions of dollars in debt, and a core client financially incapable of consistently paying the bills.

Recently, U.S. finance commentator Ed Zitron wrote that since its high-profile release in January 2025, the core project of "Stargate"—the Abilene data center campus in Texas—has only had two buildings put into operation and generating revenue, falling far short of the target of completing the entire 1.2GW capacity by the end of 2025. Multiple other data centers are said to be still at the level of empty land or a few steel beams. Sources told Zitron that the Abilene campus won't be completed until at least April 2027, and the rest of the projects are very likely to be delayed until after early 2029.

Financially, Oracle is making a huge bet on this project with massive debt. According to Bloomberg, Oracle has borrowed over $38 billion for the Wisconsin and Shackelford campuses, setting a record for similar deals, and moved them off-balance-sheet through "project financing". Oracle recorded a negative operating cash flow of $24.7 billion last quarter. Meanwhile, The Information reported that OpenAI, the sole tenant, is expected to lose over $167 billion by the end of 2028, raising fundamental doubts about its ability to pay.

Zitron bluntly stated in his article that unless OpenAI becomes the most profitable company ever within two years, "Stargate" will bring Oracle to an end. Even if Oracle eventually receives payment, the GPUs installed in the campus will likely be obsolete far before the debts are repaid. In his view, this company-wide gamble is almost destined for a tragic outcome.

Grand Launch on the White House Lawn

On January 21, 2025, Oracle CEO Larry Ellison, SoftBank CEO Masayoshi Son, and OpenAI CEO Sam Altman gathered at the White House and launched the "Stargate" project in Trump's presence. Trump announced that this newly founded American company would invest at least $500 billion in U.S. AI infrastructure and "almost immediately" create over 100,000 jobs. Ellison rushed in from Florida, even needing to borrow a jacket to be interviewed on the White House lawn.

Ellison claimed at the launch that "data centers are actually already under construction," with ten buildings underway in Texas, planning to expand to twenty. Son declared he would "immediately" deploy $100 billion and reach the $500 billion investment target in four years. Altman described it as an "exciting project."

However, Zitron pointed out that as of his writing, "Stargate LLC" has never been formally established, and neither SoftBank nor OpenAI has injected any capital into the project. The so-called "already under construction" data centers were actually started in mid-2024, initially planned by Elon Musk and xAI—Musk left because he believed Oracle was moving too slowly. Ellison's claimed "ten buildings" were actually only eight under construction, and all data centers were independently funded by Oracle and their financial backers.

Abilene Project: Flagship Engineering Repeatedly Delayed

Zitron outlined the construction timeline for the Abilene campus, filled with a series of delayed commitments: from the original planned electrification in 2025, to move-in in the first half of 2025, to "1GW potential by 2025," and completing all 1.2GW capacity by mid-2026—none of which were realized.

In December 2025, Oracle co-CEO Clay Magouyurk claimed Abilene was "progressing as planned," delivering over 96,000 Nvidia GB200 GPUs, precisely matching the capacity for two buildings. On April 22, 2026, Oracle posted that "200MW is operational, and delivery of eight buildings is still progressing as planned." Zitron points out that 200MW only supports two buildings, revealing the project is not progressing as originally planned.

According to Zitron’s sources, the third building's main structure is finished, but almost no equipment has been installed inside. The campus still needs a 360.5MW gas power plant or 1GW substation to power the GPUs, and construction progress on these is unclear. Importantly, Oracle does not own the land for the Abilene campus, but rents it from Crusoe, further shrinking its potential profits.

According to a Wall Street Journal report this week, Microsoft ultimately took over Abilene's extra 700MW of capacity—seven buildings originally allocated to OpenAI. One reason, is that lenders are uneasy about additional financing for capacity ultimately flowing to Oracle.

Other Data Centers: Empty Lots and Steel Beams

Zitron says Abilene is the closest to completion in the entire "Stargate" project. The rest—Shackelford County, TX; Port Washington, WI; Doña Ana County, NM; Saline, MI; and Milam County, TX—are mostly still just a few steel beams standing in empty lots.

Bloomberg previously reported that Oracle has postponed construction completion of several campuses from 2027 to 2028. Zitron is even more pessimistic: Given that Abilene’s two buildings took almost two years, it's unlikely these campuses will finish before early 2029. By then, the AI compute market landscape, GPU generational technology, and actual demand for computational resources will all have unpredictably changed.

The risk of technological obsolescence cannot be ignored. Zitron notes that Abilene's roughly 450,000 GB200 GPUs, under the most optimistic timeline, will be outdated before its debts are paid, with the same fate facing future GPUs installed at other data centers.

Hundreds of Billions in Debt: The Boulder Crushing the Camel

Zitron cites TD Cowen analyst Jerome Darling, who estimates that with critical IT costs of $30 million per MW and construction at $14 million per MW, Oracle’s 7.1GW data center capacity costs about $340 billion in total.

Oracle deliberately uses "project financing," relying on expected project cash flows for repayment, moving massive debt off-balance-sheet. The Wisconsin and Shackelford campuses' debts total over $38 billion, a record for this kind of project financing. Zitron calls this approach "notable and worrying"—the debt may not appear on the balance sheet, but it’s actually swallowing Oracle's cash flow, with last quarter recording a negative $24.7 billion in operating cash flow.

Sole Tenant: Can OpenAI Cover the Bill?

All these data centers are built for only one tenant—OpenAI. Zitron points out OpenAI is expected to lose over $167 billion by the end of 2028; even if annual revenue exceeds $100 billion, it will still be unprofitable, meaning OpenAI currently lacks the financial means to consistently pay Oracle for compute resources.

Meanwhile, OpenAI has made massive commitments to multiple cloud service providers, including: an eight-year, $138 billion deal with Amazon; a $250 billion long-term contract with Microsoft Azure; a three-year, $20 billion deal with Cerebras; a five-year, $22.4 billion agreement with CoreWeave; and an undisclosed sum with Google Cloud. Zitron estimates that OpenAI will need to raise at least $200 billion in the next three years just to barely fulfill those commitments—and he personally doubts OpenAI can survive long enough to pay.

Core Business Growth Stalls, Oracle Has No Other Way Out

Zitron points out that Oracle reclassified its business in FY25 Q3, now divided into cloud, software, hardware, and services. For the past nine months, the software, hardware, and services segments showed almost no growth; overall revenue expansion relied entirely on low-margin or even negative-margin cloud compute business.

This pattern leaves Oracle with almost no wiggle room: its only growth source is precisely the segment requiring continuous investment of hundreds of billions—all highly dependent on a single client’s profitability. Zitron concludes that if OpenAI fails to fulfill payment promises, Oracle will bear the immense debt burden alone, with core business stagnating, and consequences irrevocable. He sums up in blunt language:

"Stargate is putting Oracle’s entire future on the gambling table."

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