Oracle and OpenAI have jointly decided to cancel the planned expansion of their AI data center in Abilene, Texas. The move comes as Oracle reassesses its capital allocation amid mounting cost pressures and competition from hyperscale cloud providers.

Oracle’s AI infrastructure build-out has driven capital expenditures far beyond internal cash flow generation, forcing the company to seek external funding over the next three years. Management faces a delicate balance between preserving its investment-grade credit rating and avoiding shareholder dilution through equity issuance.

Oracle is set to release fiscal Q1 results on March 10, with consensus forecasts of $1.70 per share in earnings and $16.89 billion in revenue, representing year-over-year increases of 15.7% and 19.5%, respectively. Estimates have remained largely stable over the past two months, indicating steady analyst confidence.

Shares dipped in December after funding concerns dominated headlines, and the latest cancellation underscores investor worries about Oracle’s capital discipline. Market participants will closely monitor the upcoming earnings report and any revised guidance on AI spending and financing strategies.