On Friday, March 6, 2026, Oracle Corp. and OpenAI officially scrapped plans for a major expansion of their flagship “Stargate I” data center in Abilene, Texas.
The decision represents a significant pivot in their $300 billion partnership, as both companies grapple with the staggering financial and logistical costs of the AI infrastructure race.
The Canceled Expansion: 1.2 GW vs. 2 GW
The Abilene campus, a cornerstone of the White House-backed Stargate project, was slated to grow from its current 1.2-gigawatt (GW) capacity to a massive 2 GW.
- Why it was Scrapped: Negotiations reportedly stalled over financing difficulties and OpenAI’s “changing needs.” As Oracle’s debt load crossed $100 billion this week, the company was unable to secure favorable terms for the additional $15–$20 billion required for this specific 800 MW expansion.
- OpenAI’s Shift: Sam Altman has reportedly pivoted toward a more “distributed” infrastructure strategy, preferring to spread OpenAI’s workloads across multiple 500 MW sites rather than concentrating a full 2 GW at a single “mega-campus” that creates a single point of failure for the power grid.
- Nvidia’s Role: In a surprise move, Nvidia reportedly paid a $150 million deposit to the developer (Crusoe) to hold the expansion site, hoping to facilitate a deal for Meta Platforms to lease the space instead.
Oracle’s “Cash Crunch” & Massive Layoffs
The cancellation coincided with a brutal week for Oracle’s workforce and stock.
- 30,000 Layoffs: To fund its broader AI commitments (which still include 4.5 GW for OpenAI), Oracle is preparing to cut up to 30,000 jobs—roughly 20% of its workforce. The company plans to use the $8–$10 billion in savings to pay for GPUs and data center construction.
- Negative Cash Flow: Analysts warn that Oracle’s capital expenditures (CapEx) are now so high that the company will remain free cash flow negative until 2030.
- Stock Reaction: Oracle (ORCL) shares have fallen 12% this week, closing around $152 as investors grow wary of the company’s “all-in” bet on OpenAI.
Impact on the OpenAI Partnership
Despite the Texas cancellation, the overall partnership between Larry Ellison and Sam Altman remains intact, though its structure is shifting.
| Feature | Status (as of March 7, 2026) |
| 4.5 GW Contract | Still on track, but will be fulfilled across multiple smaller U.S. sites (New Mexico, Wisconsin, Michigan). |
| Abilene (Stargate I) | Operational at 1.2 GW; currently running early GPT-5.4 training workloads. |
| Financing | Oracle is moving to a “40% Upfront” payment model for new AI customers to reduce its reliance on debt markets. |
The “Meta” Opening
With OpenAI stepping back from the Texas expansion, Mark Zuckerberg’s Meta has emerged as the most likely new tenant. Meta recently announced plans to spend $135 billion on CapEx in 2026, and the Abilene site—already equipped with the high-voltage transmission lines needed for AI—is a perfect fit for Meta’s “Llama-5” training requirements.
