Oracle’s $16 Billion Michigan Megaproject Hides a $1.4 Billion Supply Chain Shock

Oracle secures $16B for a 1-gigawatt AI data center in Michigan, but a $1.1B+ server order cancellation with Super Micro raises execution risk amid legal issues.

The sprawling "The Barn" data center complex rising in Saline Township, Michigan, tells only part of Oracle’s story. While the company has locked down $16 billion in financing for the 1-gigawatt AI facility — backed by a complex capital structure involving PIMCO, Blackstone, and Related Digital — a quieter drama has been unfolding in its server supply chain that raises questions about execution risk.

A Record-Breaking Financing Package

The Michigan project, encompassing three single-story buildings totaling 1.65 million square feet, will serve Oracle’s cloud infrastructure and its ongoing collaboration with OpenAI. The financing closed with approximately $2 billion in equity from Related Digital and Blackstone-affiliated funds, paired with $14 billion in long-term debt. PIMCO took the lion’s share of the bonds — roughly $10 billion — structured as a 144A private placement maturing in 2045 with a 7.5% coupon. Bank of America served as lead structuring advisor.

The sheer scale of institutional participation signals confidence in Oracle’s ability to monetize its staggering backlog. Remaining performance obligations have surged to $553 billion, a 325% year-over-year jump driven by massive AI contracts. The company is targeting $90 billion in revenue for fiscal 2027 and plans gross capital inflows of $45 billion to $50 billion in 2026 to fund further Oracle Cloud Infrastructure expansion.

The Super Micro Cancellation

Yet just days before the Michigan financing news broke, Oracle quietly canceled a major server order with Super Micro Computer. According to Bluefin Research, the cancellation involved between 300 and 400 server racks — GB300-NVL72 units equipped with Nvidia chips — valued at roughly $3.5 million each, putting the total order between $1.1 billion and $1.4 billion. The market reacted swiftly: Oracle shares fell 4.5% on April 23 when reports of the cancellation surfaced.

Industry sources suggest the move stems from legal troubles at Super Micro, not a retreat from Oracle’s AI ambitions. A co-founder of Super Micro faces charges over alleged illegal exports of AI graphics processors to China. Taiwanese manufacturer Wiwynn has reportedly stepped in to fill the void, while Dell Technologies and Hewlett Packard Enterprise are also positioned to benefit as customers distance themselves from Super Micro’s regulatory risks.

Oracle’s own commentary supports this interpretation. In its most recent quarterly report, the company emphasized that demand still exceeds supply in parts of its cloud infrastructure business. The supplier shift appears consistent with an expanding infrastructure program rather than a pullback.

Legal Clouds and Analyst Caution

The supply chain disruption adds another layer of complexity to an already fraught legal landscape. Oracle faces a securities fraud class action alleging that executives made misleading statements about the AI infrastructure strategy — specifically that high capital expenditures would quickly translate into accelerated revenue growth, without properly disclosing risks to debt levels, credit ratings, and free cash flow. The stock plunged nearly 11% on December 11, 2025, after Oracle reported revenue below expectations while announcing $50 billion in capital spending.

Morgan Stanley has trimmed its price target for Oracle from $213 to $207, maintaining an "Equal Weight" rating while citing unresolved questions about cost structure and margins in the GPU-as-a-service business.

The Cash Flow Conundrum

Despite the headwinds, Oracle’s fundamental performance remains solid. Last quarter, the company posted earnings per share of $1.79, beating the consensus estimate of $1.71, on revenue of $17.19 billion — a 21.7% increase year-over-year. For the current quarter, management guided for EPS between $1.96 and $2.00.

Of 46 analysts covering the stock, 35 rate it a buy, with an average price target of $260.54. Yet a troubling disconnect persists: while the backlog has grown by $30 billion since the second quarter, short-term deferred revenue has stagnated at $9.9 billion. The central question is whether Oracle’s massive infrastructure buildout can generate revenue quickly enough to justify the mounting debt burden.

The stock currently trades at around $146.50 — roughly 21% above its level a month ago but still well below the 200-day moving average of $183. The February low now sits nearly 27% in the rearview mirror.

Fresh Institutional Interest

Amid the noise, new regulatory filings from April 27 reveal fresh institutional buying. Eagle Wealth Advisors LLC picked up roughly 3,000 Oracle shares, while Anchyra Partners LLC built a position of about 11,000 shares. Though modest in size, these moves signal broader repositioning ahead of further capacity announcements.

On the software front, Oracle unveiled the "AI Database Agent for Gemini Enterprise" at Google Cloud Next 2026, enabling natural-language database queries. The service is already available in 15 regions, with Worldline among the first enterprise customers.

The next quarterly results will provide the clearest test yet of whether the optimism from PIMCO and Blackstone is warranted — or whether the gap between Oracle’s record backlog and its actual cash generation is wider than the market appreciates.