Tech commentator Ed Zitron just dropped a massive essay titled "How OpenAI Kills Oracle" that tears apart Oracle's financial predicament in the Stargate project. His core argument: every single Stargate data center is built for just one tenant — OpenAI, which is projected to lose over $167 billion by the end of 2028 (citing The Information). Meanwhile, OpenAI owes Amazon, Microsoft, CoreWeave, Cerebras, and others a combined $430 billion in compute bills. Oracle is betting its entire growth on a customer that can't prove it can pay.
Zitron raises a few under-discussed issues. First, Stargate was announced 15 months ago, but Stargate LLC has never been formally created. SoftBank and OpenAI haven't put a dime into the project — all construction costs are being shouldered by Oracle and its financial partners. Second, Oracle is using project financing to shift over $100 billion in debt off its balance sheet, making its real leverage much worse than it appears. Third, even if OpenAI pays on time, Nvidia's yearly chip refresh cycles mean the GPUs inside those data centers will be obsolete before Oracle finishes paying off its loans. He cites TD Cowen analysts estimating that Oracle's 7.1GW total capacity will cost around $340 billion to build and generate roughly $75 billion in annual revenue.
Zitron also highlights an extreme tail risk: Oracle founder Larry Ellison has borrowed over $20 billion in personal loans using more than $60 billion worth of Oracle stock as collateral. If OpenAI defaults and Oracle's stock tanks, margin calls could trigger a chain reaction.
It was January 21, 2025. Per The Information, Larry Ellison, CEO of Oracle, had just flown to Washington DC from Florida, and had to borrow a coat "...so he wouldn't freeze during an interview he did on the White House lawn, according to two people who were involved in the event." He was there to announce a very big — some might even say huge — new project standing next to SoftBank CEO Masayoshi Son and OpenAI CEO Sam Altman.
"Together, these world-leading technology giants are announcing the formation of Stargate, so put that name down in your books, because I think you're gonna hear a lot about it in the future. A new American company that will invest $500 billion at least in AI infrastructure in the United States and very, very quickly, moving very rapidly, creating over 100,000 American jobs almost immediately," said President Donald Trump.
After he was done, Ellison stepped to the podium. "The data centers are actually under construction, the first of them are under construction in Texas. Each building's a half a million square feet, there are ten buildings currently being built, but that will expand to 20."
Following Ellison, SoftBank's Masayoshi Son added that Stargate would "...immediately start deploying $100 billion dollars, with the goal of making $500 billion dollars within [the] next four years, within your town!" turning to Donald Trump with his hands extended. It was unclear what town he was referring to.
Altman added that it would be "an exciting project" and that "...we'll be able to do all the wonderful things that these guys talked about, but the fact that we get to do this in the United States is I think wonderful," though it's unclear what "the wonderful things" or "this" refers to.
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It's been 15 months, and Stargate LLC has never been formed. SoftBank and OpenAI have contributed no capital to the project, other than SoftBank's own acquisition of a former electric vehicle manufacturing plant in Lordstown, Ohio that it intends to turn into a data center parts manufacturing plant with Foxconn, which is best known for effectively abandoning a $10 billion factory in Wisconsin back in 2021. Oh, and Project Freebird, a SoftBank-built project that exists to funnel money to its subsidiary SB Energy, though I can't imagine how SoftBank actually funds it.
No government money was ever involved, no funding ever left anyone's bank account, no "initiative" ever existed, and OpenAI, Oracle and SoftBank have, in my opinion, conspired to mislead the general public about the existence and validity of a project for marketing purposes.
The "data centers actually under construction" referred to a 1.2GW project in Abilene Texas that had been under construction since the middle of 2024, and had originally been earmarked by Elon Musk and xAI, except Musk pulled out because he felt that Oracle was moving too slow. While Ellison said that there were ten buildings under construction with plans to expand to twenty, only eight were actually being built (each holding around 50,000 GB200 GPUs across NVL72 racks), with the extension up in the air until March 2026, when Microsoft agreed to lease 700MW — so another seven buildings — that were meant to go to OpenAI. These buildings will not make Oracle any money, as Oracle is, despite spending so much money, leasing whatever land it uses from Crusoe.
Sidenote: Previously-unknown information from the Wall Street Journal published this week shows that the reason why Microsoft ended up buying the additional capacity at Abilene was because lenders were uncomfortable with providing additional funding to provide compute that was ultimately destined to go to Oracle.
Of those eight buildings, only two are actually online and generating revenue. Sources with direct knowledge of Oracle’s infrastructure tell me work is still ongoing on both — despite CNBC reporting back in September 2025 that they were already “operational.”
Let’s break this down. According to a May 2025 presentation by landowner Lancium, the Stargate Abilene campus was supposed to have 1.2GW of AI data centers online by the end of 2025. Based on reporting from DatacenterDynamics, the first 200MW was meant to be energized “in 2025.” As time dragged on, occupancy was supposed to begin in the first half of 2025, had “potential to reach 1GW by 2025,” complete all 1.2GW by mid-2026, be energized by mid-2026, have 64,000 GPUs by the end of 2026, as of September 30, 2025 had “two buildings live,” and as of December 12, 2025, Oracle co-CEO Clay Magouyurk said that Abilene was “on track” with “more than 96,000 NVIDIA Grace Blackwell GB200 delivered” — that’s two buildings’ worth of GPUs.
Four months later, on April 22, 2026, Oracle tweeted that 200MW was “already operational” and the full eight-building campus was “on schedule.” It’s unclear if that’s 200MW of critical IT capacity or total available power — either way, it’s only enough for two buildings. That’s decidedly not “on schedule.”
Sources familiar with Oracle’s infrastructure confirm that while construction has finished on building three, barely any actual tech has been installed. Construction has begun on a power plant of some sort, but it’s unclear if it’s the 360.5MW gas plant or a 1GW substation. In any case, Abilene needs both to turn on the GPUs, if they ever get installed.
Abilene is, for the most part, the only part of Stargate that’s anywhere near complete. The other sites — Shackelford, Texas; Port Washington, Wisconsin; Doña Ana County, New Mexico; Saline, Michigan; and Milam County, Texas — are patches of land with a few steel beams, if that. To be explicit: every single Stargate data center is funded by Oracle and its respective financial backers.
Oracle is taking on a massive amount of debt to build these data centers, working with a labyrinthine network of financiers and construction partners to pull together the capacity needed to get paid for its five-year, $300 billion compute deal with OpenAI.
Oracle has also, per Bloomberg, deliberately raised money using “project financing” loans — repaid from projected cashflow — allowing it to keep the massive debt off its balance sheet. This is remarkable — and offensive! — because it’s borrowing over $38 billion to fund its Wisconsin and Shackelford data centers (the largest debt deal of its kind on record), and that debt will effectively not exist despite its massive drag on Oracle’s cashflow, which sat at negative $24.7 billion in its last quarterly earnings.
Based on estimates ($30 million in critical IT and $14 million in construction per megawatt) from TD Cowen’s Jerome Darling, the total cost of Oracle’s 7.1GW of data center capacity will be somewhere around $340 billion to build.
All of these data centers are being built for a single tenant — OpenAI — which expects, per The Information, to lose over $167 billion (assuming it hits annual revenues of over $100 billion) by the end of 2028. As a result, it doesn’t actually have the money to pay Oracle for its compute on an ongoing basis.
Beyond its Oracle deals, OpenAI has also committed to spending $138 billion on Amazon over eight years, $250 billion on Microsoft Azure over an unspecified period, $20 billion with Cerebras over three years, $22.4 billion with CoreWeave over five years, and a non-specific amount with Google Cloud.
All of this is happening as Oracle’s core businesses plateau, even after the company reshuffled them in Q3 FY25 into Cloud, Software, Hardware, and Services segments — the latter three of which have barely budged in the last nine months as low-to-negative-margin cloud compute revenue grows.
In other words, Oracle’s only growth comes from a segment requiring hundreds of billions of dollars in compute.
And here's the kicker: every single one of these data centers is behind schedule. Stargate Abilene was supposed to be done at the beginning, then the middle, and now the end of this year, yet sources tell me there’s no way it’s finished before April 2027.
Bloomberg also reported late last year that Oracle had delayed several data centers from 2027 to 2028, but here in reality, every other Stargate data center is somewhere between a patch of dirt, a single steel beam, multiple steel beams, or less than half of a shell of a single building. Considering it’s taken two years for Stargate Abilene to build two buildings, I don’t see how these could be finished before the beginning of 2029.
And at that point, where exactly will we be in the AI bubble? What GPUs will be available? What other kinds of silicon will exist? What will demand for AI compute look like?
I’m not convinced OpenAI will be around that long, and even if it is, it’ll need to raise at least $200 billion in three years just to keep up with its commitments.
I’m surprised that nobody — outside of JustDario, at least — has raised the seriousness of this situation.
Stargate, as it stands, will kill Oracle — unless OpenAI somehow becomes the most profitable, highest-revenue company in history within two years. Even then, by the time Abilene is built, its 450,000 GB200 GPUs will be two years old and entirely obsolete long before its debts are repaid. A similar fate awaits whatever GPUs are put in the other Stargate data centers.
This installment is a deep dive into the ruinous excess of Stargate — a project that essentially means "data centers built for OpenAI in the hope that OpenAI will pay for them." Oracle is betting its entire future on their construction, and even if it gets paid, I don't see how the cash flow from OpenAI’s compute spending can recover the cost before its GPU capex becomes obsolete, let alone cover the debt from the buildout.
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- The total estimated cost of Oracle’s Stargate capacity is around $340 billion.
- OpenAI needs to make, in total, $852 billion in both revenue and funding through the end of 2030 to keep up with its compute costs with Oracle, Amazon, Google, CoreWeave, and Microsoft.
- Oracle cannot afford to pay for the cost of construction and equipment out of cash flow, and has had to take on over $100 billion in debt and sell $20 billion in shares.
- Across a potential 7.1GW of planned Stargate capacity, Oracle stands to make around $75 billion in annual revenue.
- Abilene is expected to generate around $10 billion a year in revenue on completion for a project that will likely cost in excess of $58 billion.
- Stargate Abilene is extremely behind schedule, and likely won’t be finished until Q2 2027.
- Oracle estimated in 2024 that Abilene would cost it $2.14 billion a year in colocation and electricity fees.
- Oracle has spent over $5 billion in construction costs on the first two buildings of Abilene, with sources saying that it will likely spend over $10 billion to finish them, suggesting an overall cost of around $48 per megawatt.
- Oracle’s remaining Stargate sites are barely under construction, and will likely not be finished before the end of 2028.
- Even if Oracle builds the data centers and OpenAI pays for them, the incredible upfront cost and NVIDIA’s yearly upgrade cycle will render much of the GPU capacity worthless within the next ten years.
- And if OpenAI fails to pay, Larry Ellison likely has over $20 billion in personal loans collateralized by over $60 billion in Oracle shares, meaning margin calls will follow with the collapse of Oracle's stock.
Welcome to the end of Oracle, or Sell The Compute To Who, Larry? Fucking Aquaman?