The upper prices have stalled offers. “A number of Oracle data-center leases that have been underneath negotiation with non-public operators struggled to safe financing, in flip stopping Oracle from securing the data-center capability by way of a lease,” the report mentioned. With out financing, non-public data-center operators can’t construct the services Oracle wants, making a bottleneck within the firm’s infrastructure rollout.
Oracle has already tapped debt markets closely, elevating roughly $58 billion in simply two months: $38 billion for services in Texas and Wisconsin, and $20 billion for New Mexico. However that represents solely a fraction of what the corporate in the end wants, and US banks are more and more reluctant to supply extra.
Asian banks have stepped in the place US lenders are retreating, remaining keen to lend at premium charges as they search publicity to AI infrastructure development. That gives Oracle another path for worldwide growth however doesn’t clear up the corporate’s US capability challenges. TD Cowen added that the US financing constraints elevate basic questions on whether or not Oracle can develop income if it can not safe the data-center capability its prospects expect.
Scrambling for options
Confronted with these constraints, Oracle is pursuing a number of methods to cut back its capital wants. The corporate has begun requiring 40% upfront deposits from new prospects, TD Cowen mentioned, successfully asking shoppers to assist fund the infrastructure buildout. It’s additionally exploring “convey your individual chip” (BYOC) preparations the place prospects would provide their very own {hardware}, shifting capital necessities off Oracle’s books.
TD Cowen mentioned some mixture of BYOC and workforce reductions symbolize the almost certainly path ahead, since BYOC would immediately handle the capital expenditure problem whereas job cuts would enhance money stream. However each choices carry dangers. BYOC might require renegotiating present contracts that assume Oracle offers the {hardware}, whereas main layoffs might have an effect on the corporate’s potential to execute its infrastructure plans.
The potential workforce discount can be Oracle’s largest lately. The corporate cut an estimated 10,000 jobs in late 2025 as a part of a $1.6 billion restructuring plan. Oracle has additionally repeatedly reduced headcount at Cerner since buying the healthcare expertise firm, together with layoffs in 2023 following issues with a Veterans Affairs contract.
