Oracle’s $16 Billion Data Center Gets Funded, But a $300 Billion OpenAI Pact Casts a Long Shadow

Oracle closes $16B Michigan data center financing, but shares fall 7.5% on OpenAI revenue doubts and legal threats, clouding $553B backlog.

The financing for Oracle’s massive Michigan data center campus closed last week, a $16 billion milestone that would ordinarily be cause for celebration. Instead, the software giant’s shares took a 7.5% hit, dragged down by worries about the financial health of its most important customer: OpenAI.

The juxtaposition captures the peculiar tension gripping Oracle right now. On one hand, the company is locking down record-breaking capital to build out its cloud infrastructure. On the other, the single contract underpinning the bulk of its $553 billion backlog is showing signs of strain.

A Michigan Megaproject Gets the Green Light

Related Digital and Blackstone completed the financing for a sprawling data center campus in Saline Township, Michigan, built exclusively for Oracle. The facility, spread across three buildings, will deliver over a gigawatt of capacity. Bank of America placed $14 billion in bonds for the project, with PIMCO alone snapping up roughly $10 billion. The notes carry a 7.5% coupon and mature in 2045. Goldman Sachs and Wells Fargo served as advisors.

The project has more than doubled in scope since its initial $7 billion announcement. It joins a string of similarly massive financing packages: $38 billion for sites in Texas and Wisconsin, and $18 billion for New Mexico. Oracle has already raised $30 billion of a planned $45 billion to $50 billion capital package through investment-grade and convertible bonds.

The OpenAI Problem

The financing success was overshadowed by a Wall Street Journal report that OpenAI has missed its internal targets for 2025 — neither hitting the goal of one billion weekly ChatGPT users nor its revenue projections. More troubling for Oracle: CFO Sarah Friar has reportedly expressed doubts internally about whether OpenAI can fulfill its future computing capacity commitments if revenue growth doesn’t pick up.

That matters because OpenAI has pledged to spend roughly $300 billion on Oracle data centers through 2030 — representing more than half of Oracle’s total backlog. Any wobble at OpenAI directly threatens Oracle’s growth narrative.

The competitive pressure is mounting too. ChatGPT’s share of generative AI web traffic has slid from 86.7% to 64.5%, while Google’s Gemini has climbed from 5.7% to 21.5%.

A Legal Wildcard

Adding to the uncertainty, a federal trial began on April 29 in which Elon Musk is suing OpenAI, CEO Sam Altman, and others. Musk is seeking Altman’s removal, the ouster of President Greg Brockman, and over $130 billion in damages. The jury is expected to begin deliberations by May 12. Any ruling that reshapes OpenAI’s leadership or strategy would ripple directly through Oracle’s order book.

Wall Street’s Divided View

Oracle shares now trade at roughly €139, more than 50% below the September 2025 high. The relative strength index stands at 27.5, signaling oversold conditions. Of the 46 analysts covering the stock, 35 rate it a buy, with a median price target of $227.

Wedbush Securities initiated coverage with an Outperform rating and a $225 target. Analyst Dan Ives argued in a Bloomberg interview that investors are too focused on debt and capital spending rather than the AI revenue opportunity. “Oracle could prove to be a significantly larger company over the next two to four years — the stock could ultimately double,” he said. Wedbush also noted that OpenAI’s $122 billion funding round gives it enough capital to meet its computing commitments for at least three years.

The Debt Dilemma

The balance sheet tells a more sobering story. Oracle’s long-term debt has swelled to roughly $124.7 billion, up from about $85 billion a year earlier. Projections show net debt reaching as high as $176 billion by 2029. Credit default swaps on Oracle bonds are getting more expensive — a sign that the credit market is pricing in risk.

The core structural problem is a timing mismatch. Capital expenditures for the current fiscal year are running at about $50 billion, double last year’s level. Most of the contracted revenue from the OpenAI deal won’t hit the income statement until 2027. Oracle is spending heavily now on faith that the revenue will materialize later.

Market observers note that if OpenAI stumbles, Oracle could theoretically sell excess capacity to competitors like Anthropic, given the insatiable demand for AI compute. But that’s a contingency, not a plan. For now, the stock’s trajectory depends on whether OpenAI can reverse its growth slowdown by autumn.