Episode summary
Oracle and OpenAI End Plans to Expand Flagship Data Center | Bloomberg Businessweek
Bloomberg Businessweek Daily
· · Hosts: Carol Massar, Tim Stenovec · Guests: Ed Ludlow, Ellen Wald, James Crombie, Sevasti Balafas
Summary
Oracle and OpenAI have pulled back from plans to expand a flagship AI data center in Abilene, Texas, after financing and capacity negotiations dragged on, according to Bloomberg reporting discussed in the episode. Ed Ledllo said the deal was always part of the larger Stargate buildout, but the expansion from 1.2 GW to 2 GW no longer fit OpenAI’s needs. Nvidia then stepped in as a broker, helping bring Meta into early talks with Crusoe to potentially lease the extra capacity, while also trying to keep Nvidia GPUs at the site rather than AMD’s.
The discussion framed the story as both an Oracle-specific issue and a broader signal about how hard, capital-intensive, and politically sensitive AI infrastructure has become. Ledllo said Oracle still has broader commitments to OpenAI across multiple sites, but investors are worrying about leverage, project execution, and whether announced data centers can actually be built on time.
Later segments widened to geopolitics and credit markets. Ellen Wald warned that disruptions around the Strait of Hormuz could push oil into triple digits, while James Crombie argued private credit is having a repricing and investors should read the prospectus before expecting equity-like returns. A portfolio manager said she is favoring dividend stocks and defense names while staying diversified.
Key takeaways
- Oracle and OpenAI dropped the Abilene expansion, but the broader 4.5 GW compute commitment across multiple sites is still in place, according to Ed Ledllo.
- Nvidia reportedly acted as a broker and paid Crusoe about $150 million to keep the expanded site aligned with Nvidia GPUs, not AMD chips.
- Ellen Wald said oil could reach triple digits quickly if shipping through the Strait of Hormuz is not restored soon.
- James Crombie argued private credit is being repriced after years of easy money and said investors should not expect 20% returns.
- The portfolio manager said she is leaning into dividend stocks and defense exposure rather than making dramatic portfolio shifts.
- The panel said AI data centers and private credit both expose how much of today’s market optimism depends on projects still under construction.
Notable quotes
“data centers are difficult to build. You know, what we're saying is very specific”
“the planned expansion has a tenant and they have introduced Meta into the mix”
“our understanding from sources is that what happened is Nvidia paid Cruso about $150 million”
“if we don't get traffic moving through the straight of Hormuz soon, um and and even at a reduced rate would be fine, but we've got to get some sort of movement going”
“private credit is experiencing its roach motel moment”
How the episode opens
Bloomberg Audio Studios, podcasts, radio, news. — This is Bloomberg Business Week Daily, reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Business Week Daily podcast with Carol Masser and Tim Stenc on Bloomberg Radio.
Bloomberg reporting that Oracle and Open AI have scrapped plans to expand a flagship artificial intelligence data center in Texas after negotiations dragged over the financing and Open AI's changing needs. As we said, the stock has been bouncing around. We've seen AMD also impacted under some pressure as a result.
Let's get more on what you need to know, what it says about really the AI spend, and also perhaps more importantly, what it says about Oracle specifically. With us is Bloomberg tech co-host Ed Ledllo. He's out there in our San Francisco bureau.
So Ed, um, great reporting. You guys blow us away again and again. Um, you and the team there.
Is this an AI spend story? Is this an Oracle story or a little bit of both?
I think it's a little bit of both. And data centers are difficult to build. You know, what we're saying is very specific.
The Abalene, Texas site is kind of the flagship data center as part of project Stargate, right, which we've talked endlessly about the wider initiative to get compute for OpenAI. The situation is that it's a 1,000 acre site where some of the data center is up and running, some is still being built, and Oracle had an agreement uh with Cruso, the developer, and with OpenAI to go from 1.2 2 GW of capacity to 2 GW, but they've decided not to take on that additional capacity.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai data centers
- ai chip supply
- texas expansion plans
- credit markets
- oil markets
Companies and tickers mentioned
- ORCL
- META
- NVDA
- AMD
- Oracle Corp.
- OpenAI
- Meta Platforms Inc.
- Crusoe
- Nvidia Corp.
- Advanced Micro Devices Inc.
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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