Oracle and OpenAI Kill Texas Mega-Expansion as Meta Eyes Abandoned Site

Oracle and OpenAI walked away from plans to expand their flagship AI data center in Abilene, Texas, according to Bloomberg's initial report that every major outlet has since confirmed. The project would've added roughly 600 megawatts of capacity to what's already a sprawling 1,000-acre Stargate site.

The talks fell apart over two stubborn issues: money and changing technical requirements. OpenAI's infrastructure needs kept shifting as the company raced to deploy newer, more compute-hungry models. Meanwhile, Oracle and its partners couldn't nail down financing terms that satisfied everyone at the table.

The collapse opened a window for Mark Zuckerberg's Meta, which is now in talks to lease the expansion site from developer Crusoe Energy. Nvidia reportedly helped broker these new conversations, according to sources familiar with the discussions. The same infrastructure that was supposed to power OpenAI's next-gen models could now serve Meta's Llama ambitions instead.

Crusoe Energy, the developer holding the lease, suddenly finds itself with prime AI real estate and two of tech's biggest players fighting over it. The company specializes in energy-efficient data centers and has been a key partner in the broader Stargate initiative alongside SoftBank.

Despite the expansion setback, construction continues on the original 1.2-gigawatt Stargate facility. The joint venture between OpenAI, Oracle, and SoftBank remains intact for now, though this failure raises questions about the consortium's ability to execute mega-scale projects.

The Texas site represents just one piece of a broader infrastructure push that was supposed to cement American dominance in AI development. With this expansion dead, both OpenAI and Oracle will need to find alternative paths to scale their compute capacity.

Oracle's stock reversed course when news broke, reflecting investor concern about the company's AI infrastructure ambitions. The cancellation also signals tightening capital discipline across the AI sector as companies balance massive infrastructure investments against uncertain revenue timelines.

For OpenAI, this represents a strategic pivot rather than a retreat. The company continues to scale through partnerships with Microsoft Azure and is reportedly exploring other expansion opportunities. The abandoned Texas expansion may simply have been the wrong project at the wrong price.

Meanwhile, Meta's potential entry into the Abilene site could reshape competitive dynamics. With Nvidia facilitating the deal, Meta gains access to cutting-edge infrastructure without the multi-year development timeline typically required for mega-scale AI facilities.

The broader implication: even in a red-hot AI market, not every mega-project pencils out. As one industry analyst noted, this might be the first high-profile casualty, but it won't be the last.