▶ Full Post Text
Oracle is one of the biggest names participating in the AI economy. They are building data centers used by OpenAI.
Let's first think back to that awkward Whitehouse press conference with Sam Altman, Larry Ellison, etc, announcing Stargate. Oracle's Stargate Abilene project is a disaster. Their partner, OpenAI, is no longer interested in that build out:
"OpenAI is no longer planning to expand its partnership with Oracle in Abilene, Texas, home to the Stargate data center, because it wants clusters with newer generations of Nvidia graphics processing units" [https://www.cnbc.com/2026/03/09/oracle-is-building-yesterdays-data-centers-with-tomorrows-debt.html](https://www.cnbc.com/2026/03/09/oracle-is-building-yesterdays-data-centers-with-tomorrows-debt.html)
It's also important to note that Oracle is funding their data center build outs with massive amounts of debt, $100 billion so far. Their main customer, OpenAI is also running on other people's money, specifically investment capital some of which is from investors using massive debt like Softbank.
And Blue Owl capital is heavily involved with Oracle, you remember that private credit firm in the news because they are having to limit redemptions indefinitely on their credit funds? Those issues are leading Blue Owl to cut funding for an additional Oracle facility they wanted to build and likely any future projects given the issues Blue Owl is having.
But all is contained right? Well maybe not, since yields on 10-year treasuries remain high and the contagion has spread to other overstretched private credit firms who also like funding tech. Cliffwater, Blackstone, Blackrock, Morgan Stanley have all limited redemptions on their private credit funds in the face of rising demand from clients trying to pull their money out. This is not looking good for the funding side of AI, which for those who don't know requires massive amounts of capital because it doesn't make enough profits on its own to sustain itself.
Worst of all, these credit issues were showing up months before oil prices spiked. Once the effects on demand are felt from limited oil supply, that slow down in economic activity will accelerate the credit issues in the economy. Operating costs go up on all businesses, more loans go into default, credit issuers demand higher debt payments, and credit gets even harder to find.
Speaking of higher debt payments, OpenAI has recently become so desperate they were seeking private equity funding at 17.5% rates. That doesn't scream confidence to me. Those rates are beyond junk bond status and frankly a bit sad. Mind you that's while closing down Sora, which went from "it's going to take over the film industry" to "it doesn't exist" in 6 months flat. OpenAI is looking like a desperate junkie telling investors (and itself) that AGI is just around the corner and it will all be worth it. It won't.
And as icing on the cake, Oracle just announced 30,000 employee layoffs at the start of the month (April 2026) . Does that look like a boom to you? In what world does a major player in the industry layoff 30,000 people during the boom phase? I'd hate to see the bust phase then.