The high-profile “Stargate” artificial intelligence data center project in Abilene, Texas, has encountered a setback. Sources familiar with the matter reveal that Oracle Corporation (ORCL) and OpenAI have decided to abandon plans to expand a flagship AI data center in the region. The decision comes after prolonged negotiations over financing issues and frequent changes in OpenAI’s demand forecasts, ultimately leading to the collapse of the partnership. This development has created an opportunity for social media giant Meta (META), which is considering leasing the expansion site from project developer Crusoe. It is understood that AI chip leader NVIDIA Corporation (NVDA) not only paid Crusoe a $150 million deposit to ensure continued use of its chips in the expansion project but also actively facilitated connections between Meta and the developer.
The 1,000-acre data center campus in Abilene was a crucial component of the “Stargate” project, which was announced at the White House by former President Donald Trump last year and garnered significant industry attention. Construction is still ongoing at the campus, with some facilities already operational. Under the original plan, Oracle and OpenAI intended to expand the facility’s capacity from 1.2 gigawatts to approximately 2.0 gigawatts (1 gigawatt is equivalent to the power generation capacity of a nuclear reactor, capable of simultaneously powering approximately 750,000 homes). However, after prolonged negotiations, both parties ultimately decided not to proceed with this expansion.
The reasons for the partnership’s breakdown are complex and varied. The protracted negotiations, coupled with unresolved financing issues and OpenAI’s fluctuating demand forecasts for computing power, made the already complicated collaboration unsustainable. Meanwhile, tensions arose between Oracle and developer Crusoe over project reliability concerns. According to sources, earlier this year, some liquid cooling equipment failures caused by winter weather led to data center buildings being offline for several consecutive days.
Despite the shelved expansion plans in Abilene, the overall collaboration between Oracle and OpenAI continues. Last July, Oracle agreed to develop 4.5 gigawatts of data center capacity for OpenAI, and that agreement is still progressing as planned. The companies have also announced other collaborative projects near Detroit and elsewhere. Both companies maintain that their relationship remains solid. Oracle stated in a statement that it is proud of its collaboration with OpenAI and the ongoing rollout of computing capacity. Crusoe also expressed its commitment to working closely with Oracle to build one of the world’s largest AI factories in Abilene.
This news has triggered a chain reaction in the market. Oracle Corporation’s stock price in New York on Friday gave up earlier gains, closing down 1.11% at $152.96. Shares of other AI infrastructure-related companies, including CoreWeave, AMD, and NVIDIA, also declined.
