It turns out infinite growth might not actually be possible. On Friday, Bloomberg reported that Oracle will be delaying some of its data center projects for OpenAI for at least a year due to labor and material shortages. Wall Street, which is definitely not extremely nervous about the sustainability of an economy entirely propped up by investments in AI, is not handling it well, responding to the news with a sell-off of companies involved in AI infrastructure before trading closed.
The delays will push the planned completion of the data center projects back from 2027 to 2028, which might not seem like the biggest deal in the world on paper, but the runway for AI companies to crack the revenue code and turn their extremely red balance sheets black is not that long. A year’s delay in completing these data centers means a year of setback for training and deploying AI tools, which means a year’s delay in finding out if all the money poured into these companies actually amounts to anything.
There’s certainly some truth to the cause of the delays, lest you worry that the wind is picking up near this house of cards. The Wall Street Journal recently reported that the data center rush has created a shortage of capable construction workers and driven up the wages of those who are available to take these jobs. Meanwhile, Trump’s tariffs have made construction material harder to come by and, according to a recent report from Forbes, have contributed as much as $6 billion in additional costs to the AI buildout.
But Oracle has always been something of a bellwether when it comes to the market’s confidence in AI. Back in September, Oracle had a pretty rough quarterly earnings report, missing on its revenue and earnings projections, and producing net income that was flat year-over-year. And yet, it defied gravity and its stock soared thanks to the company’s fat stack of remaining performance obligations—financial agreements that will provide revenue that have not yet been fulfilled. The company had a projected $455 billion coming in, in no small part due to data center agreements with OpenAI.
Suddenly, it feels like those commitments might not be the sure things the market has believed them to be. And it’s far from the first indicator that Oracle’s deals in particular may be more smoke and mirrors than racks and processors. Earlier this year, reports indicated that the Stargate project that Oracle and OpenAI are heavily involved in has also been moving significantly slower than expected. That didn’t stop OpenAI CEO Sam Altman from announcing even more investments on this front a few months later, which, of course, pushed the market even higher. But if it’s not yet clear to Wall Street that just announcing these multi-billion-dollar deals does not guarantee they’ll ever actually materialize, it’s at least started to give some of them a sense of queasiness.
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