Oracle Shelves Abilene Expansion, Keeps 4.5 GW AI Buildout On Schedule, Price Target Cut
Oracle and OpenAI have scrapped plans for additional expansion at their 1,000-acre Abilene AI data center campus, though the initial 4.5 GW buildout for OpenAI remains on schedule with sections already running Nvidia AI semiconductors. Jefferies cut Oracle’s price target to $320 from $400 following the shelving decision.
1. Project Background
The Stargate initiative launched last year committed Oracle to build a $500 billion AI data center campus spanning 1,000 acres in Abilene, Texas, with an initial 4.5 GW of dedicated capacity for OpenAI powered by Nvidia semiconductors.
2. Shelved Expansion
Oracle and OpenAI canceled plans to expand beyond the core 4.5 GW capacity after financing terms and evolving compute requirements stalled negotiations, leaving Meta Platforms as a potential tenant with Nvidia posting a $150 million deposit.
3. Market Reaction and Price Target
Following the shelving decision, Jefferies lowered Oracle’s price target from $400 to $320, and shares relinquished earlier gains as investors weighed execution risks and high leverage from data center buildout obligations.
4. Future Outlook
Despite suspension of further expansion, eight data center sites remain under construction on schedule, though investors remain cautious about demand shifts, operating lease commitments and the company’s heavy reliance on OpenAI for AI growth.