Microsoft has secured a lease for a Texas data‑center project that was originally being developed for Oracle Corporation and OpenAI. The facility, located in Abilene, Texas, has a power capacity of about 700 MW, a figure that is large but not gigawatt‑scale. Microsoft will use the site to support its Azure AI services and to host OpenAI workloads, effectively removing the project from Oracle’s planned portfolio.
Oracle had incorporated the Abilene site into its $50 billion capital‑expenditure program aimed at delivering 10 GW of AI‑specific capacity by 2029. The Texas project was one of many sites in that program, and Oracle and OpenAI withdrew after financing talks stalled and OpenAI’s needs shifted. Oracle may need to adjust its capacity plans, and the company’s $553 billion remaining performance obligation (RPO) provides visibility into future contracted revenue but also signals the scale of its AI infrastructure commitments.
Microsoft’s lease aligns with its own $80 billion AI‑data‑center investment through 2028. By securing the Abilene facility now, Microsoft positions itself to meet growing AI demand while anticipating an oversupply and falling prices in the coming years. The move also gives Microsoft a ready‑to‑use, high‑power site that can accelerate Azure AI and OpenAI deployments.
Oracle’s AI infrastructure strategy has attracted scrutiny. In Q3 FY2026, Oracle reported an 84% surge in cloud‑infrastructure revenue, prompting Bank of America to upgrade the company to Buy with a $200 price target and Citi to raise its target to $320. Oracle’s stock rallied earlier after strong earnings, but the company faces debt and capital‑expenditure pressures and is cutting workforce to support its AI expansion. Oracle CEO Safra Catz noted that "most of the revenue in this 5-year forecast is already booked in our RPO," while co‑CEO Clay Magouyrk said that "renting out AI chips from partners such as Nvidia would have margins of 30% to 40%". Oracle founder Larry Ellison added, "Oracle will be the number one builder and operator of cloud infrastructure data centres. We will build and operate more cloud infrastructure data centres than all of our cloud infrastructure competitors."
The lease underscores the competitive pressure from hyperscalers in securing AI‑infrastructure projects. Oracle’s strategic pivot to AI infrastructure faces headwinds, and the ability to deliver on its 10 GW target may be delayed. Microsoft’s expansion positions it to capture AI demand, while Oracle’s loss of the Abilene site signals a shift in the AI data‑center race and may influence investor perception of Oracle’s execution risk and debt‑backed expansion strategy.
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