Oracle’s $165 Billion Desert Bet: Green Power, Red Ink, and a Single Client’s Shadow

Oracle's $553B cloud backlog faces counterparty risk as OpenAI struggles to pay, while a massive New Mexico data center pushes ahead with fuel-cell power.

The numbers coming out of Oracle’s data-center expansion are staggering by any measure. A single campus in New Mexico could cost $165 billion. The company’s cloud backlog stands at $553 billion. Yet the stock has lost more than half its value since September, and the reason is as simple as it is unsettling: the biggest customer in that backlog is struggling to pay its bills.

OpenAI, the artificial-intelligence pioneer that signed a $300 billion cloud-infrastructure deal with Oracle, has missed its internal target of one billion weekly active users by the end of 2025. First-quarter revenue goals for fiscal 2026 also fell short. Chief Financial Officer Sarah Friar has reportedly warned internally that the company faces funding gaps unless growth accelerates — an alarming prospect given OpenAI’s planned data-center spending of over $100 billion.

The arithmetic is brutal. OpenAI currently generates roughly $12 billion in annual revenue, but to fulfill its five-year contract with Oracle, it would theoretically need to spend about $60 billion per year starting in 2027. Market participants are increasingly treating this as a counterparty risk, and Oracle’s share price has paid the price.

A Desert Campus Powered by Fuel Cells

While Wall Street frets about OpenAI’s finances, Oracle is pushing ahead with one of the most ambitious data-center projects ever conceived. On April 27, the company and BorderPlex Digital Assets announced that the “Project Jupiter” campus in Doña Ana County, New Mexico, will be powered entirely by Bloom Energy fuel cells rather than the gas turbines and diesel generators originally planned. The installation will reach up to 2.45 gigawatts of capacity — enough to power a small city.

The switch has real environmental consequences. Fuel cells generate electricity without combustion, cutting nitrogen-oxide emissions by roughly 92 percent compared with the original design. The entire campus will operate as a single microgrid, spanning 1,400 acres with four data-center buildings, battery storage, and even a seawater desalination plant.

Oracle is the anchor tenant for the complex. Developers Stack and BorderPlex have penciled in investments of up to $165 billion. For the local community, the project promises more than $600 million in state and county tax revenue, $320 million directly to Doña Ana County for schools and infrastructure, and $50 million for water supply. Construction is expected to create 4,000 jobs, with 1,500 permanent positions to follow.

Not everyone is celebrating. The Empowerment Congress of Doña Ana County and two residents have sued the County Commission, alleging a lack of information and procedural errors in the approval of tax breaks.

Debt, Spending, and a $553 Billion Backlog

Oracle’s financial position is under intense scrutiny. The company has budgeted capital expenditures of between $45 billion and $50 billion for fiscal 2026 — a figure that CNBC reports is 43 percent higher than what was expected just three months ago. Free cash flow has turned deeply negative, total debt stands at roughly $125 billion, and interest expenses rose 32 percent year over year.

The offset is a record order book. Remaining performance obligations, or RPO, have surged to $553 billion, a 325 percent increase from earlier periods. Infrastructure-as-a-service revenue grew 84 percent in the fiscal third quarter to nearly $4.9 billion, confirming that demand for AI computing capacity remains robust.

But the timing mismatch is painful. Most of those contracted revenues won’t start flowing until 2027 at the earliest, while the spending is happening now. Oracle’s cloud infrastructure deal with OpenAI alone is worth $300 billion over five years, but the customer’s financial health is deteriorating.

Analysts Split as Stock Hits Oversold Territory

The analyst community is divided on what to make of Oracle’s predicament. Wedbush Securities, which reiterated an “Outperform” rating and a $225 price target on April 24, argues that the market is misreading Oracle’s investment cycle as speculative risk. Analyst Dan Ives contends that the spending is backed by contracts and that demand still outstrips available supply. Of the 46 analysts covering the stock, 35 rate it a buy.

Jefferies takes a more cautious view, suggesting that OpenAI’s struggles could signal a broader slowdown in AI infrastructure spending. Pure-play AI models, the firm notes, face high customer-acquisition costs and low retention rates.

The technical picture offers little comfort. Oracle shares trade at roughly €140, more than 50 percent below the 52-week high of €280.70 set in September 2025. The relative strength index stands at 26.5, deep in oversold territory. In euro terms, the stock is about 16 percent below where it started the year.

Clarity could come later today when Alphabet, Microsoft, Amazon, and Meta report quarterly earnings. If those results show that the industry’s estimated $600 billion-plus in 2026 AI investments are generating operational returns, the pressure on Oracle could ease — at least temporarily.

For now, Oracle is juggling a $165 billion desert megaproject, a $125 billion debt load, and a single customer whose cash crunch threatens the entire thesis. The next quarterly report will test whether Dan Ives is right that investors are simply pricing the company wrong — or whether the market’s anxiety is entirely justified.