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

Oracle secures $16B Michigan data center financing, but stock slides 7.5% on OpenAI growth fears and $153B debt scrutiny.

A $16 billion data center project in Michigan has secured financing, yet Oracle's stock is under pressure from a different front: concerns about its biggest customer, OpenAI.

The Michigan Deal: A Record-Setting Bond Placement

Related Digital and Blackstone closed financing in late April for a massive data center campus in Saline Township, Michigan, built exclusively for Oracle. The facility will deliver over one gigawatt of capacity across three buildings.

The financing structure was notable: Bank of America placed $14 billion in bonds, with PIMCO alone purchasing roughly $10 billion. The bonds carry a 7.5% coupon and mature in 2045. Goldman Sachs and Wells Fargo advised on the deal.

The project has more than doubled since its initial announcement, when it was pegged at $7 billion. It joins a series of massive Oracle data center financing packages: $38 billion for sites in Texas and Wisconsin, and $18 billion for New Mexico.

OpenAI's Growth Pains Hit Oracle's Stock

The financing success couldn't prevent Oracle shares from sliding. A Wall Street Journal report triggered the sell-off, revealing that OpenAI—one of Oracle's most critical customers—had missed internal targets for user growth and revenue. More troubling: OpenAI's finance chief reportedly expressed internal doubts about whether the company could meet future computing capacity commitments if revenue growth doesn't accelerate.

That hits Oracle directly. The company signed a $300 billion cloud contract with OpenAI. Shares lost nearly 7.5% at one point. Oracle responded with a public reaffirmation of the partnership, citing strong demand for OpenAI's models. Market observers noted that excess capacity could be marketed to competitors like Anthropic given sustained AI demand.

The Debt Debate: Hidden Liabilities or Smart Financing?

The OpenAI news has also amplified scrutiny of Oracle's balance sheet. George Noble, a former Fidelity fund manager, published a detailed critique on X, arguing that Oracle uses project financing structures to keep debt off its books, leading analysts to significantly underestimate actual leverage.

The officially reported numbers are already striking. Total liabilities rose 60% to a record $153.1 billion. Free cash flow is deeply negative, driven by over $48 billion in data center investments over the past four quarters. Oracle also plans to raise another $50 billion through debt and equity.

Wedbush Sees a Double

Wedbush Securities initiated coverage with an "Outperform" rating and a $225 price target. Dan Ives argued in a Bloomberg interview that investors are overly focused on debt and capital expenditures rather than AI revenue potential: "Oracle could prove to be a significantly larger company over the next two to four years—the stock could ultimately double."

Ives noted that Oracle has already raised $30 billion of a planned $45 to $50 billion capital package through investment-grade bonds and convertible notes.

Wedbush also countered concerns about OpenAI's financial health, pointing to the company's recent $122 billion funding round, which it said gives OpenAI enough capital to cover computing needs for at least three years.

The Core Problem: Costs Now, Revenue Later

The structural challenge remains: data center buildout costs are hitting now, with capital expenditures for the current fiscal year at roughly $50 billion—double last year's level. The bulk of contracted revenue won't flow into the income statement until 2027.

Operationally, Oracle is performing well. In the third quarter of fiscal 2026, revenue grew to $17.2 billion. Cloud revenue rose 44%, with infrastructure up 84%. It was the first quarter in over 15 years where both revenue and adjusted earnings per share grew more than 20%.

The stock doesn't reflect that. In euro terms, shares trade at around €140—roughly 50% below the 52-week high from September 2025. The RSI sits at 27.5, signaling deeply oversold conditions.

Of 46 analysts, 35 recommend buying the stock. The next concrete test comes with Q4 results: Oracle has guided for revenue growth of 19% to 21% and cloud growth of 46% to 50%. How quickly sentiment shifts will depend largely on whether OpenAI can reverse its growth trajectory by autumn.