OpenAI and Oracle abandon their planned expansion of the Stargate AI data center project in Texas.

OpenAI and compute partner Oracle have reportedly abandoned a planned expansion of their flagship Stargate datacenter in Abilene, Texas, according to Bloomberg sources familiar with the matter. The two companies had planned to grow the facility to as much as 2 gigawatts of capacity, up from the 1.2 gigawatt campus currently under development. The cavitation responsible for derailing the plan was attributed to a combination of financing challenges and OpenAI's inability to forecast demand effectively.

Meta is now reportedly in the running to lease the untapped and unbuilt capacity from the site's developer Crusoe after Nvidia stepped in to broker a deal. According to Bloomberg, Nvidia put down a $150 million deposit on the future capacity before approaching Meta about potentially moving in together.

Since announcing the $500 billion Stargate initiative just over a year ago, OpenAI has tapped Oracle to deploy 4.5 gigawatts of compute capacity to fuel model development and services. That contract, which Oracle values at $300 billion over its lifetime, is apparently still on track. To finance its datacenter aspirations, Oracle announced plans this week to raise an additional $50 billion in debt and equity. However, it seems the financing won't arrive in time to save Oracle and OpenAI's expansion plans.

Meta CEO Mark Zuckerberg is meanwhile committed to securing as much datacenter capacity as possible. During Meta's Q4 earnings call in January, the company announced its intention to plow up to $135 billion into capital expenditures with an eye for GPU compute capacity. Combined, the eight largest hyperscalers — Google, Amazon, Meta, Microsoft, Oracle, Tencent, Alibaba, and Baidu — are expected to spend a collective $710 billion in 2026 alone, much of it on datacenters and the GPUs and other equipment that go into them.

While Oracle and OpenAI may not be moving forward with the Abilene expansion, OpenAI will need to find somewhere to place 5 gigawatts worth of GPUs to claim the $30 billion carrot Nvidia has offered as part of the $110 billion funding round announced last week in collaboration with SoftBank and Amazon.