Oracle’s Stargate Stumble: How a Single Report Shook Confidence in the $500 Billion AI Megaproject

Oracle Corporation saw its shares slide after a report raised questions about the company’s actual role in the Stargate AI infrastructure project — the ambitious $500 billion joint venture announced with great fanfare by President Donald Trump earlier this year. The sell-off underscores a growing tension between Wall Street’s sky-high expectations for AI-related spending and the murky realities of how that money will actually be allocated among the project’s participants.

The stock decline was triggered by reporting from The Information, which indicated that Oracle’s involvement in the Stargate venture may be more limited than investors had previously assumed. The report suggested that Oracle might not be as central to the project’s data center buildout as the market had priced in, prompting a rapid reassessment of the company’s near-term AI revenue trajectory.

The Stargate Vision: A $500 Billion Bet on American AI Supremacy

When the Stargate project was unveiled in January 2025, it was presented as a defining moment for American artificial intelligence infrastructure. Standing alongside executives from OpenAI, SoftBank, and Oracle, President Trump described it as the largest AI infrastructure project in history. The plan called for the construction of massive data centers across the United States, with an initial commitment of $100 billion and a potential total investment reaching $500 billion over four years.

Oracle’s co-founder Larry Ellison was prominently featured at the announcement, and the company was listed as one of the key technology partners. For Oracle investors, the implication was clear: the enterprise software and cloud infrastructure giant would be a primary beneficiary of the enormous capital expenditure flowing into the project. Oracle’s stock had already been on a strong run, buoyed by growing demand for its cloud infrastructure services from AI companies, and the Stargate announcement added further momentum.

Cracks in the Narrative: What The Information Reported

According to The Information, the reality of Oracle’s participation may be more nuanced than the headline partnership suggested. The report indicated that Oracle’s role could be narrower than that of other partners, particularly SoftBank and OpenAI, which appear to be driving the financial and strategic decisions behind the venture. While Oracle would still provide cloud infrastructure and technology services, the scale of its direct involvement — and therefore the revenue it could expect to capture — may have been overstated by market participants who extrapolated aggressively from the initial announcement.

The distinction matters enormously. In a project of this magnitude, the difference between being a lead infrastructure provider and a secondary technology vendor could translate into billions of dollars in revenue over the project’s lifespan. Wall Street analysts had built models that assumed Oracle would capture a significant share of the data center construction and ongoing cloud services contracts. Any downgrade in that assumption would naturally compress the stock’s valuation premium.

Oracle’s Cloud Ambitions and the AI Arms Race

Oracle has been aggressively repositioning itself as a major player in cloud infrastructure, particularly for AI workloads. Under CEO Safra Catz and with Ellison’s continued strategic influence, the company has invested heavily in expanding its data center footprint and securing partnerships with AI companies. Oracle Cloud Infrastructure, or OCI, has won notable contracts, including a significant deal with OpenAI itself, and the company has reported accelerating growth in its cloud revenue in recent quarters.

The company’s fiscal third-quarter results, reported in March 2025, showed cloud infrastructure revenue growing more than 40% year over year. Remaining performance obligations — a forward-looking metric that captures contracted but not yet recognized revenue — surged past $130 billion, a figure that management attributed in part to large AI-related deals. Ellison told analysts on the earnings call that demand for Oracle’s AI infrastructure was “unprecedented” and that the company was building data centers as fast as it could.

The Market’s Reaction: A Reality Check or an Overreaction?

Oracle shares fell several percentage points following The Information’s report, erasing billions of dollars in market capitalization. The sell-off was notable not just for its magnitude but for what it revealed about how much of Oracle’s recent stock appreciation was tied to Stargate-related expectations. When a single report about the scope of a partnership can move a company’s valuation by that much, it suggests the market had been pricing in a best-case scenario with little margin for disappointment.

Some analysts pushed back on the sell-off, arguing that Oracle’s AI growth story extends well beyond the Stargate project. The company has secured cloud infrastructure deals with multiple AI companies and hyperscalers, and its multi-cloud strategy — which allows customers to run Oracle databases on Microsoft Azure and other platforms — has broadened its addressable market. Even if Oracle’s Stargate role is smaller than initially assumed, these analysts contend, the company’s overall cloud trajectory remains strong.

SoftBank, OpenAI, and the Power Dynamics Within Stargate

The Stargate project’s governance structure has been a subject of speculation since its announcement. SoftBank’s Masayoshi Son has positioned his firm as the primary financial backer, committing to arrange the majority of the funding. OpenAI, led by CEO Sam Altman, is the project’s primary technology consumer and strategic driver — the data centers being built are fundamentally designed to train and run OpenAI’s increasingly powerful AI models.

This dynamic places Oracle in a supporting role, providing infrastructure technology and cloud services but not necessarily controlling the project’s direction or capturing the lion’s share of its economics. Microsoft, which was notably absent from the initial Stargate announcement despite being OpenAI’s largest investor and cloud partner, adds another layer of complexity. Reports have suggested that Microsoft’s relationship with OpenAI has become strained as Altman has sought to diversify the company’s infrastructure dependencies — a factor that may have initially inflated perceptions of Oracle’s importance to the project.

Broader Implications for AI Infrastructure Stocks

The Oracle episode is part of a broader pattern in which AI-related stocks have been subject to sharp moves based on shifting perceptions of who will capture the economic value from the AI buildout. Nvidia, the dominant supplier of AI training chips, has seen its own stock whipsaw on reports about export controls, supply constraints, and competition from custom silicon. Similarly, companies like Vertiv, Eaton, and other data center infrastructure providers have experienced volatility as investors attempt to map the flow of capital from headline-grabbing AI announcements to actual purchase orders.

The fundamental question facing investors is whether the enormous sums being discussed — $500 billion for Stargate alone, plus hundreds of billions more in planned capital expenditure from Microsoft, Google, Amazon, and Meta — will actually materialize on the timelines being projected. History suggests that infrastructure buildouts of this scale often encounter delays, cost overruns, and shifting priorities. The fiber-optic boom of the late 1990s remains a cautionary tale: massive investment in physical infrastructure ultimately created value, but many of the companies that built it went bankrupt before demand caught up with supply.

What Comes Next for Oracle and the Stargate Partners

Oracle is expected to provide more clarity on its Stargate involvement and broader AI pipeline in upcoming earnings calls and investor presentations. The company has historically been guarded about disclosing the details of specific customer contracts, but the magnitude of the market reaction may force management to be more forthcoming about the nature and scale of its Stargate commitments.

For the Stargate project itself, the coming months will be telling. Ground has been broken on initial data center sites in Texas, and the pace of construction will offer tangible evidence of whether the project is tracking toward its ambitious targets. Permitting, power supply, and equipment procurement — particularly for Nvidia’s in-demand GPU clusters — represent potential bottlenecks that could affect all participants.

The broader takeaway for investors is that in the current AI investment cycle, the gap between announcement and execution remains wide. Companies that are named in headline-grabbing partnerships do not automatically capture proportional economic value, and the market’s tendency to extrapolate from press conferences to earnings models can create fragile valuations. Oracle remains a legitimate beneficiary of the AI infrastructure buildout, but the Stargate episode is a reminder that the details of these complex, multi-party ventures matter as much as the top-line numbers.

As one veteran technology analyst noted in a recent client note, the AI infrastructure investment cycle is real, but investors need to distinguish between companies that are building the picks and shovels and those that are merely standing near the gold mine. For Oracle, proving which category it falls into will be the defining challenge of the next several quarters.