Oracle shares fall 5.2% as AI partner skips data center deal

Oracle shares fell 5.2% after news that Blue Owl Capital, a regular partner in its AI infrastructure projects, will not provide equity for a Michigan data center development.

Instead, Blackstone is reportedly in talks to supply the equity, while Bank of America is leading a US$14 billion debt financing for the project.

Oracle is not the direct borrower but is expected to agree to a long-term lease on the facility, a structure it has used for similar projects in Wisconsin, Texas, and New Mexico.

Blue Owl reportedly passed on the Michigan deal due to terms it viewed as less favorable and concerns about potential delays linked to local political factors.

Lawmakers in Michigan are considering repealing data center tax incentives, though Governor Gretchen Whitmer supports the project.

🔗 Source: Bloomberg

🧠 Food for thought

Implications, context, and why it matters.

Michigan’s political uncertainty threatens Oracle’s data center financing

Blue Owl exited Michigan, signaling sensitivity to state policy risk as lawmakers push a bipartisan three-bill repeal led by Jim DeSana and Dylan Wegela 1.
These projects rely on exemptions, with 36 states running incentive programs 2. In Texas, projected costs jumped from $130 million to $1 billion in 23 months 3.
Oracle uses a lease model where it commits to long occupancy while third parties supply equity and debt, so steady costs matter and tax breaks move them 4.
governor Gretchen Whitmer called the $7 billion Saline Township plan the largest economic project in state history, yet pushback in Howell Township derailed similar proposals 1.

Financiers and advisors can use state incentive volatility

Insurers covering corporate debt can target Oracle, with default insurance near 2009 highs, as lease obligations reach $248 billion across diverse jurisdictions.
Policy consultants can map which of the 36 states face repeal risk 2. Michigan’s bipartisan opposition spans farmland preservation and a possible 39% jump in peak demand if multiple projects proceed 1.
Alternative lenders and equity funds can price political risk more aggressively than Blue Owl, focusing on Central Ohio or Sarpy County, Nebraska, while a nationwide tally counted 1,240 data centers built or approved by late 2024 5.
At least 12 states withhold aggregate revenue losses from data center tax breaks 3. Examples include Indiana, North Carolina, and Utah, so advisors who navigate opaque programs can charge premium fees 3.