Oracle's AI Ambitions at Risk: Can the 2028 Data Center Delays Be a Buying Opportunity?

Oracle's $300 billion, five-year cloud computing contract with OpenAI-announced in September 2025-has positioned the company as a central player in the AI infrastructure race. However, recent developments, including construction delays, rising debt, and investor skepticism, have cast a shadow over the viability of this ambitious bet. As the tech sector grapples with the scale of AI-driven capital expenditures, the question remains: Is Oracle's current turmoil a warning sign, or a buying opportunity for those willing to bet on its long-term vision?

The Stargate Gamble: A $300B Bet on AI's Future

Oracle's partnership with OpenAI is part of a broader initiative called "Stargate," which aims to build up to 30 gigawatts of AI computing capacity in the U.S. by 2028, with total investments estimated between half a trillion to a trillion dollars. The Oracle-OpenAI deal alone accounts for 4.5 gigawatts of annual data center capacity, equivalent to powering millions of homes. This partnership marks a strategic shift for OpenAI, which historically relied on Microsoft's Azure, and underscores Oracle's pivot toward high-growth AI infrastructure.

Yet, the scale of this investment comes with inherent risks. According to a report by Bloomberg, Oracle's CEO, Clay Magouyrk, has acknowledged that the company will likely need less than $100 billion to complete its data center build-out, but this claim has done little to quell concerns about the $105–110 billion in debt Oracle has already accumulated. With liabilities potentially reaching $290 billion by 2028, Oracle's leverage ratio now exceeds 4x debt-to-equity-a level that has triggered warnings from credit agencies like Moody's and Morgan Stanley.

Construction Delays and Capital Expenditure Pressures

The first major red flag emerged in late 2025 when Oracle announced delays in completing OpenAI-linked data centers from 2027 to 2028. Labor shortages, supply chain bottlenecks, and slower-than-expected construction progress have pushed back timelines, raising concerns about a mismatch between Oracle's $15 billion in higher-than-anticipated fiscal 2026 capital expenditures and the revenue these projects will generate.

This delay has had immediate financial consequences. Oracle's Q4 2025 earnings report revealed a revenue miss, with total revenue falling short of estimates at $16.06 billion, while capital expenditures surged to $12 billion in the quarter-a $3.75 billion increase above expectations. The company's free cash flow turned deeply negative in Q2 2026 at -$13.2 billion, driven by AI infrastructure spending. Analysts at Reuters note that Oracle's remaining performance obligations (RPO) have grown to $523 billion, but converting this into actual revenue remains a challenge.

Investor Skepticism and Systemic Risks

Oracle's stock volatility has mirrored these concerns. Following the delay announcement, shares plummeted nearly 7%, dragging down other AI-related stocks like Nvidia and AMD. The company's credit risk has also deteriorated, with Bloomberg reporting that the cost of protecting Oracle's debt against default has risen to 1.246 percentage points annually. This reflects broader fears about the AI infrastructure sector's reliance on debt-fueled expansion and uncertain returns.

The risks extend beyond Oracle. Industry experts warn of a potential "bubble" in AI data center construction, with total infrastructure costs potentially reaching $10 trillion globally. Oracle's aggressive borrowing-culminating in a $18 billion bond sale in September 2025-has made it the largest issuer of investment-grade debt among non-financial firms. While the company's CEO has emphasized its expertise in building "high-performance and cost-efficient" cloud data centers, skeptics argue that Oracle's financial leverage and OpenAI's unprofitable status create a dangerous counterparty risk.

Is This a Buying Opportunity?

Despite the headwinds, some analysts see potential in Oracle's long-term vision. The company's RPO of $523 billion represents a pipeline of future revenue, and its strategic alignment with OpenAI-now valued at $500 billion-positions it to benefit from the AI boom if execution improves. Additionally, Oracle's recent $30 billion in annual debt financing plans suggest it has the capacity to fund its AI ambitions, albeit at a high cost.

However, the risks are significant. Oracle's ability to service its debt, convert RPO into revenue, and deliver on the Stargate project by 2028 will be critical. A failure to do so could trigger a broader correction in the AI sector, given the interconnected nature of infrastructure providers like Oracle, chipmakers like Nvidia, and AI startups.

Conclusion: A High-Stakes Bet

Oracle's $300 billion OpenAI deal is a testament to the transformative potential of AI-but it's also a high-stakes gamble. For investors, the key question is whether the company can navigate its debt challenges, overcome construction delays, and deliver on its promise of AI-driven growth. While the current turmoil may present a buying opportunity for those with a long-term horizon, it's a bet that demands careful scrutiny of Oracle's financial resilience and the broader AI market's trajectory.