Oracle announced that the completion of several data‑center projects built for OpenAI will now be pushed to 2028, a full year later than the original 2027 target. The delay stems from a combination of labor shortages and material supply constraints that have slowed construction across multiple sites, including the flagship Abilene, Texas facility and a new hub in Singapore.
The postponement is part of a $300 billion, five‑year agreement that began in 2027 and is expected to deliver OpenAI with the compute capacity it needs to train and run its next‑generation models. Oracle’s capital‑intensive buildout has already cost the company $12 billion in Q2 FY26, with a full‑year forecast of $50 billion. The delay means that the company will need to extend the capital‑expenditure window and may delay the recognition of revenue tied to the remaining performance obligations (RPO) of $523 billion, which grew 433% year‑over‑year to $523.3 billion in Q2 FY26.
Oracle’s co‑CEO Clay Magouyrk noted on the earnings call that the Abilene site is on track, with over 96,000 Nvidia GPUs already installed, but acknowledged that other sites are experiencing slower progress. Management’s comments suggest that while some projects are on schedule, the overall timeline for the full suite of OpenAI data centers is now uncertain. The delay has heightened investor concerns about Oracle’s ability to convert its large RPO backlog into revenue in a timely manner, especially given the company’s recent revenue miss of $16.1 billion versus analyst expectations of $16.21 billion.
Market reaction to the announcement was muted in terms of headline numbers but reflected broader anxieties about the return on Oracle’s AI investments. Analysts highlighted that the delay could erode Oracle’s competitive edge against hyperscalers such as AWS and Microsoft Azure, which have already secured significant AI compute contracts. The news also reinforced concerns that Oracle’s aggressive capital spending may not translate into immediate revenue growth, a factor that has weighed on the company’s valuation.
Looking ahead, Oracle’s cloud revenue grew 68% year‑over‑year to $4.1 billion in Q2 FY26, indicating strong demand for its cloud services. However, the extended timeline for the OpenAI data‑center projects could slow the pace at which Oracle captures new AI‑related revenue streams. The company’s strategy to diversify its cloud partnerships and capture a larger share of the AI compute market remains on track, but the delay underscores the execution risk inherent in large‑scale infrastructure projects.
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