Oracle Corp.’s aggressive push into artificial intelligence infrastructure is hitting a financial wall. Soaring debt levels are complicating funding for massive data center projects, raising questions about the software giant’s ability to keep pace with hyperscaler rivals like Microsoft and Amazon. A recent snag with private lender Blue Owl Capital refusing to back a $10 billion Michigan facility underscores the mounting pressures, as reported by the Financial Times and CNBC.

The company’s shares plunged 5% on December 17 after Blue Owl pulled out of equity talks for the Michigan project, citing concerns over tougher debt terms and potential delays. Oracle insisted the project remains ‘on schedule,’ but investors remain skeptical amid broader worries about its balance sheet. Debt has ballooned to fund capital expenditures that hit $12 billion in the latest quarter, exceeding analyst expectations of $8.25 billion, according to Fortune.

Debt Spiral Accelerates Amid AI Frenzy

Oracle’s transformation from enterprise software provider to AI cloud contender has come at a steep cost. Partnerships with OpenAI and others demand enormous investments in GPU-packed data centers. Yet, with net debt surpassing $90 billion—up sharply from pre-AI boom levels—lenders are balking. Banks earlier lined up $38 billion in financing for Texas and Wisconsin sites, per Bloomberg, and another $18 billion for New Mexico, as noted by Reuters.

Lease commitments have surged nearly 150% to meet AI demand, CNBC reports, while capex shows no signs of abating. CEO Safra Catz has defended the spending, but analysts question sustainability as bond yields climb on perceived risks. Oracle’s stock has shed 45% from September peaks, reflecting fears that debt servicing could crimp future growth.

Lender Pullback Signals Wider Credit Squeeze

Blue Owl’s retreat from the $10 billion Michigan deal, detailed in the Financial Times, highlights how Oracle’s leverage is spooking private capital. The firm worried about project timelines and debt covenants amid Oracle’s overall borrowings. This isn’t isolated: Yahoo Finance notes the episode puts ‘rising debt in focus’ as Oracle stock sinks further.

Posts on X from CNBC amplified the concerns, with updates on Oracle’s debt spilling into projects and potential hyperscaler spending slowdowns if Oracle reins in capex. Bank of America still sees AI trade potential into 2026, but Oracle’s woes could temper enthusiasm across the sector.

Capex Surge Outpaces Revenue Gains

Oracle’s fiscal Q2 results revealed capex at $12 billion, driven by AI infrastructure for clients like OpenAI. Revenue grew, but margins compressed under spending pressure. Fortune describes Oracle’s fall from ‘market darling’ as a reality check on AI economics, where debt financing collides with construction realities.

Executives like Larry Ellison tout full-stack cloud platforms, but funding gaps threaten delivery. Earlier X posts from Oracle emphasized infrastructure investments, yet current sentiment on the platform centers on debt risks, with CNBC tweeting about lease jumps and earnings duds.

Rivals’ Advantage in Funding Wars

Microsoft and Amazon, with stronger balance sheets, face fewer hurdles scaling AI capacity. Oracle’s debt-to-EBITDA ratio, now over 4x, contrasts with peers below 2x, per analyst estimates. Bloomberg’s reporting on massive bank loans shows lenders still willing for secured projects, but unsecured or equity-like deals grow riskier.

Oracle may pivot to joint ventures or government incentives for sites in Texas and New Mexico. Reuters highlighted the $18 billion New Mexico loan from 20 banks, led by JPMorgan, signaling some financing avenues remain open despite Blue Owl’s exit.

Investor Reckoning and Path Forward

Wall Street reacts harshly: Oracle underperforms the Nasdaq amid rotation from AI stocks. Fortune experts warn the industry can’t evade debt physics, even in euphoria. X chatter from CNBC links Oracle’s issues to Fed decisions and broader AI fatigue.

Oracle could cut capex or issue equity, but dilution fears loom. Safra Catz’s guidance stressed discipline, yet Q3 outlook disappointed. As 2025 closes, Oracle’s debt bind tests its AI pivot—success hinges on securing funds without eroding shareholder value.

Strategic Shifts in AI Infrastructure Race

Partnerships buffer some risks: OpenAI relies on Oracle for capacity amid its own funding rounds. But delays in Michigan could cede ground. Yahoo Finance reports Blue Owl’s no-go amplifies debt spotlight, with stock tumbling on the news.

Longer-term, Oracle eyes autonomous cloud features to differentiate, echoing past X promotions. Yet, immediate priority is refinancing: bond markets watch closely as yields on Oracle paper widen versus peers.