Blue Owl Reportedly Withdraws $10 Billion Funding Support
Oracle Denies Claim... Renewed Concerns Over Overheated AI Investment
Oracle, an artificial intelligence (AI) cloud service provider, saw its stock price plunge by more than 5% as it struggled to attract investment for its $10 billion (approximately 14.8 trillion won) OpenAI-focused data center construction project in Michigan. Amid growing concerns over the uncertain timing and scale of monetization compared to massive investments in AI infrastructure, controversy over 'shadow debt'-where long-term lease-based financing could lead to future financial risks-has further weighed on AI-related stocks.
On December 17 (local time), Oracle shares closed at $178.46 on the New York Stock Exchange, down 5.4% from the previous day.
The direct trigger for the stock's decline was a report by the Financial Times (FT) on the same day. According to the FT, global private asset management firm Blue Owl Capital had been in discussions with Oracle to build a 1-gigawatt (GW) data center for OpenAI in Saline Township, Michigan, but recently decided not to provide funding for the project.
Blue Owl has been a major funding partner for global big tech companies in the data center and digital infrastructure sectors. The negotiations reportedly broke down due to Oracle's increasing debt and the heavy investment spending in the AI sector.
This situation has reignited market concerns about the very structure of AI infrastructure investments. According to Bloomberg, so-called 'hyperscalers'-including Oracle, Microsoft, Amazon, Meta, and Google, which build and provide cloud services through core AI infrastructure such as data centers-tend to rely on external investors rather than direct capital investment for infrastructure construction. In this structure, private equity or real estate investors build the data centers, and big tech companies lease them for decades. While this reduces the initial capital burden, it is seen as a structural risk because long-term fixed costs accumulate over time.
Such arrangements often do not appear directly as liabilities on big tech companies' financial statements. However, since these contracts cannot be easily terminated even during economic downturns or periods of slowing AI demand, they are considered a potential risk factor. As large annual rental payments remain as fixed costs, investors increasingly view these as de facto hidden liabilities that exist outside the official balance sheet.
In fact, Oracle signed data center lease agreements totaling approximately $150 billion (about 221.7 trillion won) in just the past three months (September to November), with cumulative lease commitments reaching $248 billion (about 366.5 trillion won).
Amid these concerns, Blue Owl's withdrawal from the Michigan project is seen as a clear example of the financial risks underlying the AI infrastructure investment boom. Blue Owl reportedly determined that the lease and debt terms for this project were less favorable compared to other deals. A source familiar with the matter explained, "It is true that Blue Owl reviewed the project, but decided to withdraw because the debt terms and repayment structure were unfavorable."
However, Blue Owl is reportedly still involved in two other Oracle data center projects. Blue Owl has served as a key sponsor and funding source for Oracle's data center projects in Texas, New Mexico, and other locations.
In response, Oracle countered that Blue Owl was never a candidate for equity investment negotiations. Oracle stated, "Our development partner, Related Digital, selected the optimal equity investment partner from among competitive candidates, and Blue Owl is not a partner in this project," adding, "Final negotiations on equity investment are proceeding as scheduled."
Meanwhile, this sense of uncertainty spread across the broader AI sector. In addition to Oracle, Broadcom and AMD fell by 4.48% and 5.29%, respectively, on the day. Nvidia dropped 3.81%, while Alphabet, Google's parent company, declined by 3.21%.
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