Oracle is grappling with multibillion-dollar cost overruns at two artificial intelligence data centers under construction in Wisconsin and El Paso, Texas, according to company disclosures. The cost blowouts have triggered regulatory fights that are complicating the projects.
The scale of the overruns
Oracle did not disclose the exact dollar figure for the overruns, but the company described them as “multibillion-dollar.” The data centers are part of a broader push to build out computing capacity for AI workloads, a capital-intensive bet that has strained even deep-pocketed tech firms. Oracle’s BBB credit rating, already below investment grade, adds pressure: the company must fund the overruns without tipping its debt load further.
Regulatory fights erupt
Local permitting and environmental reviews are at the center of the disputes. In Wisconsin, the project has drawn scrutiny from county officials over zoning and water usage. In El Paso, regulators have questioned the project’s power demands and grid impact. Oracle is contesting some of the requirements, arguing that delays increase costs further. The company did not name the specific regulators involved.
Why the projects matter
Oracle’s AI data centers are supposed to help the company compete with Amazon Web Services, Microsoft Azure, and Google Cloud in the rapidly growing market for AI computing. The overruns undercut the economics of those plans. A BBB credit rating means borrowing costs are higher, compounding the financial strain. The company has not said whether it will seek additional financing or slow construction.
The Wisconsin and El Paso sites are two of several large-scale data centers Oracle has announced. The company has not disclosed timelines for completion or whether the overruns will affect other projects.
What’s next
Oracle is expected to provide an update on the projects during its next earnings call. The company has not said whether it will restate its financial guidance. The regulatory fights remain unresolved, and the cost overruns could grow if construction halts or permits are delayed. Investors are watching how Oracle manages the spending without a credit rating upgrade.
