---
title: "How OpenAI's \"Stargate\" Project Is Dragging Down Oracle"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/284726463.md"
description: "Analysts believe the \"Stargate\" project faces hundreds of billions of dollars in massive off-balance-sheet debt due to severe construction delays and missed deadlines on core campus development. With its sole tenant, OpenAI, suffering huge losses and having questionable payment capacity, Oracle has made an all-in bet amid stagnating growth in its core business, facing the technical risk that assets will become obsolete before delivery. If OpenAI fails to deliver on its promises, this high-stakes gamble on the company's future could lead to a financial collapse for Oracle"
datetime: "2026-04-30T08:39:43.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/284726463.md)
  - [en](https://longbridge.com/en/news/284726463.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/284726463.md)
---

# How OpenAI's "Stargate" Project Is Dragging Down Oracle

OpenAI's "Stargate" AI data center project may be pushing Oracle into a financial predicament with potentially catastrophic consequences. Launched with grand narratives, the project is behind the scenes plagued by severely delayed progress, hundreds of billions of dollars in massive debt, and a core customer that is financially unable to sustain bill payments.

Recently, US financial commentator Ed Zitron wrote that since its high-profile launch in January 2025, the core of the "Stargate" project—the Abilene, Texas data center campus—**has only two buildings operational and generating revenue, falling far short of the original target to complete the full 1.2GW capacity by the end of 2025**. Several other data centers are reportedly still at the stage of empty lots or with only a few steel beams. Insiders told Zitron that the Abilene campus will not be completed until after April 2027 at the earliest, while the remaining projects are highly likely to be delayed until after early 2029.

Financially, Oracle is making a huge bet on this project with massive debt. As previously reported by Bloomberg, Oracle has borrowed over $38 billion for the Wisconsin and Shackelford campuses, setting a record for transactions of this scale, and moved it off-balance sheet through a "project finance" structure. Oracle's operating cash flow recorded a negative $24.7 billion last quarter. Meanwhile, according to The Information, the sole tenant, OpenAI, is expected to accumulate losses exceeding $167 billion by the end of 2028, raising fundamental questions about its payment ability.

Zitron stated bluntly in his article that **unless OpenAI becomes the most profitable company in history within two years, "Stargate" will finish Oracle.** Even if payments are eventually received, the GPUs installed in the campus will have long become obsolete products before the debt is repaid. In his view, this high-stakes gamble betting the company's entire future is almost destined for a disastrous 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 to high-profilely launch the "Stargate" project, witnessed by Trump. Trump announced that this newly established US company would invest at least $500 billion in US AI infrastructure and create over 100,000 jobs "almost immediately." Ellison flew in hastily from Florida and even had to borrow a jacket temporarily to be interviewed on the White House lawn.

At the press conference, Ellison stated that "the data centers are actually already under construction," with ten buildings under construction in Texas, planned to expand to twenty. Son stated he would deploy $100 billion "immediately" and reach the $500 billion investment target within four years. Altman described it as an "exciting project."

However, Zitron pointed out that as of the time of writing, **"Stargate LLC" was never formally established, and neither SoftBank nor OpenAI injected any capital into the project.** The so-called "already under construction" data center is actually a project that started in mid-2024, initially planned by Elon Musk and xAI—Musk withdrew because he believed Oracle was moving too slowly. The "ten buildings" claimed by Ellison actually have only eight under construction, and all data centers are independently funded by Oracle and their respective financial supporters.

## Abilene Project: Flagship Engineering Repeatedly Misses Deadlines

Zitron reviewed the construction timeline of the Abilene campus, **which is filled with a series of delayed promises:** from the initial plan to power up in 2025, to starting occupancy in the first half of 2025, then to "having the potential to reach 1GW in 2025," and completing the full 1.2GW capacity by mid-2026—none of these milestones were met.

In December 2025, Oracle Co-CEO Clay Magouyurk claimed that Abilene was "proceeding according to plan," having delivered over 96,000 Nvidia GB200 GPUs, a quantity corresponding exactly to the configuration scale of two buildings. On April 22, 2026, Oracle posted that "200MW is operational, and the delivery of eight buildings is still proceeding according to plan." Zitron pointed out that 200MW is only enough to support the operation of two buildings, which itself indicates that the project is not proceeding as originally planned.

According to insiders cited by Zitron, although the main structure of the third building is complete, almost no equipment has been installed inside. The campus still needs a 360.5MW gas power plant or a 1GW substation to provide power for the GPUs, and the progress of related construction remains unclear. Notably, Oracle does not own the land of the Abilene campus but leases it from Crusoe, which further compresses its space to benefit from the campus.

As reported by the Wall Street Journal this week, Microsoft ultimately took over the additional 700MW capacity in Abilene—i.e., the seven buildings originally planned to be allocated to OpenAI. Part of the reason is that **lenders are uneasy about providing additional financing for computing power that ultimately flows to Oracle.**

## Remaining Data Centers: Empty Lots and Steel Beams

Zitron stated that Abilene is the part of the entire "Stargate" project closest to completion. The remaining data centers—Shackelford, Texas; Port Washington, Wisconsin; Doña Ana County, New Mexico; Saline, Michigan; and Milam County, Texas—**are mostly just a few steel beams standing on empty lots.**

As previously reported by Bloomberg, Oracle has delayed the completion time of several data centers from 2027 to 2028. Zitron gave a more pessimistic prediction regarding this: **given that it has taken nearly two years for the two buildings in Abilene, it is highly unlikely that these campuses will be completed before early 2029.** By then, the landscape of the AI computing market, GPU technology generations, and the actual demand for computing resources will have undergone unpredictable changes.

The risk of technological obsolescence is also not to be ignored. Zitron pointed out that the approximately 450,000 GB200 GPUs in the Abilene campus, even under the most optimistic timeline, will become obsolete before the related debt is repaid, and the GPUs to be installed in the remaining data centers will face the same fate.

## Hundreds of Billions in Debt: The Boulder Crushing the Camel

Zitron cited estimates from TD Cowen analyst Jerome Darling, calculating that based on a critical IT cost of $30 million per megawatt and a construction cost of $14 million, the total construction cost for Oracle's 7.1GW data center capacity is approximately $340 billion.

Oracle deliberately adopted a "project finance" structure, using the project's expected cash flow as the source of repayment, to move large-scale debt off-balance sheet. The combined debt for the Wisconsin and Shackelford campuses exceeds $38 billion, setting a record for the largest scale of such project finance transactions. Zitron described this practice as "noteworthy and concerning"—**although the debt does not appear on the balance sheet, it is truly devouring Oracle's cash flow, with operating cash flow recording a negative $24.7 billion last quarter.**

## Sole Tenant: Can OpenAI Cover This Bill?

All these data centers were built for only one tenant—OpenAI. Zitron pointed out that OpenAI is expected to accumulate losses exceeding $167 billion by the end of 2028, and even if its annual revenue exceeds $100 billion by then, it will still not escape losses, meaning the company currently does not possess the financial ability to continuously pay Oracle for computing power.

Meanwhile, OpenAI has also made large-scale commitments to multiple cloud service providers, including: an eight-year, $138 billion agreement with Amazon, a $250 billion long-term contract with Microsoft Azure, a three-year, $20 billion contract with Cerebras, a five-year, $224 billion agreement with CoreWeave, and a cooperation with Google Cloud of unspecified amount. Zitron estimated that **OpenAI needs to raise at least $200 billion in the next three years to barely maintain the above commitments**—and he personally doubts whether OpenAI can survive long enough to fulfill its payment obligations.

## Core Business Growth Stalls, Oracle Has No Retreat

Zitron pointed out that Oracle reclassified its business in the third quarter of FY25, adjusting it into four segments: Cloud Computing, Software, Hardware, and Services. However, the Software, Hardware, and Services segments have seen almost no growth in the past nine months, with overall revenue expansion relying entirely on low-margin or even negative-margin cloud computing businesses.

This situation leaves Oracle with little room for maneuver: its only source of growth is precisely the segment that requires hundreds of billions of dollars in continuous investment and whose profit prospects highly depend on a single customer. Zitron's conclusion is that once OpenAI is unable to fulfill its payment commitments, Oracle will bear the pressure of massive debt alone against the backdrop of sluggish growth in its core business, with irreparable costs. He summarized in straightforward terms:

> **"Stargate is betting Oracle's entire future on the gambling table."**

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