Oracle & OpenAI Scrap Texas Data Center Expansion Plan, Sending AI Stocks Lower

AI-related stocks are sliding late in the New York cash session after Bloomberg News reported that Oracle and OpenAI have scrapped plans to expand the Stargate AI data center in Abilene, Texas, from about 1.2 GW to 2.0 GW. Sources said the expansion was canceled after talks stalled over financing issues and OpenAI’s changing demand forecasts.

However, the collapse of the Oracle-OpenAI plans has opened the door for Meta, which is now in talks to lease the space instead. Nvidia is reportedly helping to broker that deal and has put down a $150 million deposit with developer Crusoe.

Progress at our datacenter in Abilene. Fun to visit yesterday! pic.twitter.com/W22ssjWstW

— Sam Altman (@sama) September 24, 2025

Oracle’s broader 4.5 GW data center agreement with OpenAI remains intact, and other projects are still moving forward, according to the report.

The report erased all of Oracle’s intraday gains within minutes.

The selling extended across AI-related stocks:

• NVIDIA SHARES EXTEND DROP TO SESSION LOW; DOWN AS MUCH AS 2.5%

• COREWEAVE SHARES TURN NEGATIVE, FALL MORE THAN 2%

AI-related stocks slide.

The story comes one day after Bloomberg reported that Oracle is preparing to lay off thousands of workers as it spends aggressively on AI data center buildouts.

The planned cuts will affect divisions across the company and may be implemented by the end of this month, according to the outlet, citing people familiar with the matter who asked not to be named. Some of the cuts will target jobs that AI will replace, according to two people familiar with the plans.

Wall Street analysts forecast that the cloud unit’s data center spending will drive Oracle’s cash flow negative through the end of the decade, with a payoff not expected until 2030. Oracle has said it may raise up to $50 billion this year through debt and equity to fund data center buildouts.

Earlier in the week, Oracle internally announced that it would review many of the open job listings in its cloud division, effectively slowing or freezing the hiring process, according to sources.

Separately, Oracle previously disclosed its largest-ever restructuring plan, up to $1.6 billion in the fiscal year ending May (including severance). That disclosure helped push ORCL CDS wider, and the spread has since blown out to its widest level since the 2008 financial crisis.

“Interesting development. With AI demand still exploding, it’s surprising to see a major data center expansion paused. Makes you wonder if this is about costs, power constraints, or just a strategic shift,” X user Mudirshin noted.