Oracle is leading technological corporations to lock themselves into a whopping $500 billion web on long-term data center leases to build factories and overload balance sheets with debt, creating dependence on a single, cash-burning client, OpenAI. Will Oracle’s $500 billion data center space for lease gambling be a financial gamble?
Oracle, alongside Microsoft and Google, are committing 19-year leases to bypass long construction delays by going from ownership to aggressive renting of data centers, to build cloud infrastructure.
Centering the spree, Larry Ellison’s cloud giant lease obligations surged by 148% in one quarter, to $248 billion, to support its partnership with Sam Altman’s OpenAI. In 2026, Oracle’s capital expenditure is expected to hit $35 billion – more than half is expected in revenue. Its net debt, however, could triple to reach around $300 billion by 2028.
Ellison’s “aggressive AI war tactics” are a project of dangerous strength born from weakness of being left out from AI’s still unproven profitability, according to experts.
“Once some financial realities set in, the company will be among the first to pare CAPEX, in the process revealing that Oracle’s AI flex was from weakness,” according to Reuters.
In Oracle’s eyes, AI is no longer all about software talent and clever code, but has become powered by physical infrastructure, such as land, electricity, chips, and titans of buildings with servers.
Rented capacities are the true cost of this generative AI boom.
AI Built on Data Center Rent
Opting long-term data center lease allows Oracle, and others, to redirect construction risk to landlords and financiers.
Only in one quarter, the total future obligations jumped to colossal numbers of billions of dollars, all tied to data center leases expanded across almost two decades, will deliver the needed foundation for large AI “superclusters” that train and operate advanced models.
In retrospect, big cloud companies like Oracle, Microsoft’s Azure, and Google Cloud opting for data center space for lease means immediate access to GPUs and power. Locking in data center space for rent is the way to stay competitive in the AI race.
Data center leasing explains why nearly $500 billion in future rental commitments are now on the books across major cloud providers. For Oracle, the push has been especially aggressive, with spending aimed at expanding its oracle data center footprint and accelerating deployment across new regions.
For local governments and utilities, this surge in data center renting signals years of construction ahead. New hubs are taking shape around fundamental oracle data center locations, tying regional growth more closely to AI demand than ever before.
Investor Sentiment
Investors are questioning whether data center rent requirements could possibly become a burden if AI demand slows. Looking at the market’s reaction, the stock market has lost 40% in three months.
According to the Financial Times, the worries intensified after that Blue Owl Capital removed its hand from financing a US facility, and delays linked to OpenAI infrastructure plans.
Yet, many investors remained interested and invested, despite seeking a data center for rent.
Bank of America published its latest survey showcasing the fears of an “AI bubble” rising, which has surpassed the economic shoch induced by President Trump, even as Big Tech stocks remain crowded trades. The belief is that scale will win, and companies that can rent a data center quickly will control the upcoming growth era.
Larry Ellison leans towards that belief. Oracle’s capital spending is expected to reach $35 billion by ending May 2026, far higher than rivals like Microsoft, as a share of revenue.
The strategy depends on securing data center space for lease early, even if that means taking fixed costs far into the future.
Investors now have a keen eye on how fast leased facilities become live systems, how efficient data center for rent capacity transforms into cloud revenue, and whether the long-term data center for lease commitments prove imaginative over time.
Inside Telecom provides you with an extensive list of content covering all aspects of the tech industry. Keep an eye on our Tech sections to stay informed and up-to-date with our daily articles.