Oracle denies report on OpenAI data center delays
Dec 12 (Reuters) – Oracle on Friday denied a media report that it was delaying OpenAI-related data center rollouts following investor concerns over debt-fueled AI infrastructure buildout.
Bloomberg News reported earlier in the day that Oracle postponed the completion dates of some data centers it is developing for OpenAI to 2028, a year later than planned, due to labor and material shortages.
“There have been no delays to any facilities required to meet our contractual commitments and all milestones are on track,” Oracle spokesman Michael Egbert told Reuters in an emailed statement. he said.
“We remain fully compliant with OpenAI and are confident in our ability to deliver on both our contractual commitments and future expansion plans,” Egbert added.
Oracle shares, which fell 3.6% following the report, pared some of their losses to 2.8% in afternoon trading. Other AI-related stocks also fell; Chip giant Nvidia, Advanced Micro Devices, Micron and Arm Holdings fell between 2% and 4.5%.
The Bloomberg report came a day after Oracle posted its biggest stock decline since late January, following earnings that showed rising spending and a weak outlook for a company increasingly reliant on OpenAI.
Oracle, long a smaller cloud computing player, entered the AI infrastructure race this year following a $300 billion OpenAI data center deal. But growth forced the company to borrow aggressively.
Investors, spooked by signs that Google is getting ahead in the artificial intelligence race and Oracle’s increasing debt burden, have sold the company’s shares and bonds in recent weeks. The cost of insuring Oracle’s debt against default rose to its highest level in at least five years on Thursday and rose again on Friday.
Shares are up just 13% for the year, erasing all gains from a 36% rise in September when it reported a massive backlog of over $450 billion, mostly tied to OpenAI.
Investors are increasingly selective about AI and less willing to indiscriminately reward spending on AI, even if they are confident in its long-term potential.
OpenAI did not immediately respond to Reuters’ request for comment.
Following the Bloomberg report, some analysts said the news showed bottlenecks beyond chips were emerging in the data center expansion that tech companies have funded with hundreds of billions of dollars of investment.
“Concerns about the ability to build data centers due to construction delays, power availability and other practical factors are becoming a much larger factor than expected demands for AI capabilities,” said Bob O’Donnell, principal analyst at TECHnalytics Research.
But he added that the market is becoming more sensitive to news of AI delays as investors examine the returns on spending.
Broadcom also lost more than 11% on Friday after warning that rising sales of its low-margin specialized AI processors were hurting profitability, raising fears the business could become less lucrative.
(Reporting by Juby Babu in Mexico City, additional reporting by Arnav Mishra and Anhata Rooprai in Bengaluru; Editing by Krishna Chandra Eluri and Alan Barona)
