OpenAI and Oracle abandon Texas data center expansion plans, media reports say Meta may take over, Nvidia involved

Media reports indicate that Oracle and OpenAI have abandoned plans to expand a flagship AI data center in Texas due to prolonged negotiations over financing issues and OpenAI’s changing demands.

Sources familiar with the matter revealed that the breakdown of negotiations created an opportunity for Meta to step in. Meta is considering leasing land from developer Crusoe for the expansion project in Abilene, Texas. Sources told the media that NVIDIA, a leader in AI chips, helped facilitate discussions between Meta and the developer.

Analysts believe this shift highlights the complexity of building AI data centers. Such projects are expected to require hundreds of billions of dollars in investment and coordination among multiple partners.

Crusoe’s data center campus in Abilene is part of the highly anticipated “Stargate” project. The project was announced last year by President Trump at the White House. Sources say that the 1,000-acre site is still under construction, with some facilities already operational, but Oracle and OpenAI have ultimately decided not to proceed with their previously planned large-scale leasing expansion.

Oracle and OpenAI used NVIDIA chips in the Stargate project. Sources told the media that as Crusoe searches for new tenants, NVIDIA has stepped in to ensure that the expanded data center will continue to use its chips rather than competitors like AMD. It is reported that NVIDIA paid Crusoe a $150 million deposit and has begun helping attract Meta as a tenant for the expansion.

In July last year, Oracle agreed to develop a 4.5 GW data center capacity for OpenAI. The agreement is still progressing as planned, and both parties announced projects at several other locations, such as a facility near Detroit owned by Related Digital.

Oracle’s stock price retreated from earlier gains and closed down 1.11% at $152.96 on Friday in New York. Other companies involved in AI infrastructure, such as CoreWeave, AMD, and NVIDIA, also declined following the announcement.

Prolonged negotiations, frequent changes in financing and demands led to the breakdown of cooperation

The enormous computational power required for training and deploying AI models has driven an unprecedented boom in data center construction. Oracle has shifted its business strategy to focus on providing data center capacity for clients like OpenAI and Elon Musk’s xAI. Meta is also heavily investing in AI infrastructure for its products, with capital expenditures expected to reach as high as $135 billion in 2026 alone. NVIDIA remains the primary supplier of AI computing chips.

Crusoe’s data center in Abilene is one of the most closely watched projects. Oracle is rapidly deploying servers in the facility, which are used by OpenAI to train and run its AI products. Since mid-2025, Oracle, Crusoe, and OpenAI have been discussing expanding the facility’s capacity from 1.2 GW to about 2.0 GW. One gigawatt roughly equals the power output of a nuclear reactor, enough to supply around 750,000 homes at any given time.

Sources familiar with the matter said that the negotiations dragged on too long, and issues with financing and OpenAI’s frequently changing demand forecasts made the negotiations complex, ultimately leading to the breakdown.

Additionally, tensions have arisen between Oracle and Crusoe over the reliability of the project. Sources told the media that earlier this year, the data center experienced several days of downtime due to winter weather affecting some liquid cooling equipment.

Both companies stated that their relationship remains strong, and Oracle’s leasing project in Abilene is progressing rapidly.

Oracle issued a statement:

“We are very proud of our partnership and the ongoing capacity we are bringing online.”

Crusoe stated:

“Crusoe and Oracle are working closely to build one of the world’s largest AI factories in Abilene. Our collaboration enables us to deliver large-scale infrastructure faster than anyone in the industry.”

Sources told the media that negotiations between Meta and Crusoe regarding the Abilene expansion are ongoing, and the situation may still change. Currently, Meta is building several large data centers in Louisiana and Indiana. Last month, Meta also reached an agreement with AMD to deploy 6 GW of equipment.

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