tl;dr
Major banks secure a record $38 billion debt deal to fund Oracle's AI data centers, marking a pivotal moment in tech infrastructure investments and raising questions about risks and rewards in the AI boom.
**Banks Finalize Record $38 Billion Debt Deal to Fuel Oracle’s AI Data Center Expansion**
Banks are set to finalize a landmark $38 billion debt deal as early as Monday, marking the largest financing package for artificial intelligence (AI) infrastructure to date. The agreement, led by JPMorgan Chase & Co. and Mitsubishi UFJ Financial Group (MUFG), will fund two massive data centers under construction by Vantage Data Centers for Oracle Corp., which plans to use them to host OpenAI’s operations. This move is a cornerstone of Oracle’s $500 billion “Stargate” initiative, a sweeping investment in AI infrastructure aimed at solidifying its position in the rapidly evolving tech landscape.
The financing is split into two senior secured credit facilities: a $23.25 billion package for a Texas data center and a $14.75 billion facility for a project in Wisconsin. Additional banks, including Wells Fargo, BNP Paribas, Goldman Sachs, and others, have also been assigned portions of the deal. While spokespeople for JPMorgan, MUFG, and OpenAI declined to comment, Oracle and Vantage Data Centers did not immediately respond to requests for further details.
Oracle’s dual chief executives, Mike Sicilia and Clay Magouyrk, defended the massive investment, emphasizing the company’s push toward “applied AI” — a strategy combining infrastructure, analytics, and applications to deliver tangible benefits for businesses. The deal underscores Oracle’s ambition to compete with tech giants like Microsoft and Amazon in the AI space, particularly as it partners with OpenAI. However, concerns linger about the financial risks tied to the partnership.
Moody’s recently flagged risks to Oracle’s balance sheet, citing its heavy reliance on OpenAI, which is not expected to turn profitable until 2029. Oracle’s stock surged over 40% last month following a $317 billion in future contract revenue, much of it tied to a five-year $300 billion deal with OpenAI. Yet the shares later dipped 7.1% amid worries about thin margins on renting specialized Nvidia chips, though they recovered quickly.
The deal also highlights a broader surge in investor demand for AI infrastructure. Similar to Meta’s recent $29 billion debt and equity deal for a Louisiana data center, the Vantage financing reflects a race among banks and private credit firms to capitalize on the AI boom. The Vantage loans, structured with interest-only payments during construction and amortization upon operation, are priced 2.5 percentage points above benchmark rates and maturing in four years with extension options.
As the AI sector grapples with fears of a potential “bubble,” Oracle’s bold move underscores both the opportunities and risks of betting big on next-generation technology. With data centers serving as the backbone of AI innovation, the $38 billion deal signals a pivotal moment in the industry’s evolution — one where financial firepower and strategic partnerships will determine who leads the next wave of technological disruption.