Oracle's Cloud Expansion Hits the Grid: Nuclear Deals, Rating Pressure, and a Stock Still Down 24%

Oracle's AI infrastructure push faces grid constraints and a BBB? rating; shares closed at EUR 126.50, down 24% this year despite a record USD 664 billion backlog.

Oracle's push to become the backbone of global AI computing is running straight into the physical limits of power grids and the growing caution of credit markets. The stock closed Friday at EUR 126.50, up 2.9% on the day amid a broadly brighter technology sector, yet it remains down 24% since the start of the year and sits 54% below its 52-week high.

The day's gain obscures a deeper debate that has shifted well beyond software licenses and AI announcements. The real question now is who secures the data centers, the enormous electricity volumes, and the scarce processors in time. Oracle is positioning itself squarely in the middle of that transformation.

Power as the New Currency

Nothing illustrates the entanglement of technology and hard infrastructure more clearly than energy. Oracle announced an agreement to draw electricity from the Point Beach nuclear plant, a move expected to save power customers in Wisconsin roughly USD 300 million in fuel costs. The arrangement still requires approval from the Public Service Commission of Wisconsin.

The company's ambitions in New Mexico show how tangible the bottleneck has become. At its Jupiter campus, Oracle plans 2.45 gigawatts of capacity but was forced to notify STACK Infrastructure of a force majeure event on September 24. Such steps underscore a structural shift: anyone claiming a leading role in AI must now prove themselves as an energy and infrastructure developer. Plant contracts, gas pipelines, and grid connections face protracted bureaucratic reviews, and the pace of expansion is no longer dictated by customer demand alone but by the hard capacity limits of power networks.

A Record Backlog, a Strained Balance Sheet

Despite these operational frictions, management is pressing ahead. Cloud infrastructure revenue jumped 121% year over year to USD 7.4 billion, while the contracted order backlog swelled to a record USD 664 billion — evidence of continued demand from major customers.

That backlog also demands enormous upfront investment, the kind that stretches even established technology giants. Building modern server farms consumes vast sums long before the first clusters operate productively and generate reliable cash flows. Balance sheet stability has moved into focus — a factor many market participants had simply ignored during the euphoria of recent years.

In July 2026, S&P downgraded Oracle's credit rating to BBB?, leaving its obligations just one notch above speculative territory. To fund its infrastructure needs, the company announced a capital raise of USD 45 to 50 billion. Credit default swap premiums have climbed to multi-year highs in parallel.

Lenders who once supplied the tech industry's massive investment plans with cheap money almost unconditionally are now demanding stricter risk protection and higher premiums. The expansive drive is losing its sense of inevitability, forcing management back toward more disciplined capital allocation.

International Contracts and Insider Confidence

Reports of large international orders have also drawn attention. According to media accounts, Tencent Holdings plans a five-year lease for Oracle data centers in Southeast Asia covering roughly 100,000 modern AI chips. The deal's total value is estimated at about USD 7 billion, with an upfront payment of around one-third. Reuters noted, however, that these figures could not be independently verified, as both companies left inquiries unanswered.

Signals from Oracle's own ranks suggest the leadership trusts its course. A mandatory filing with the US securities regulator shows the Living Trust of Oracle director Stephen H. Rusckowski acquired 25,000 Oracle shares on Tuesday at a weighted average price of USD 139.352 per share.

Beyond its core IT business, Oracle is advancing strategic partnerships. On Thursday, Oracle Health signed a non-binding letter of intent with the King Faisal Specialist Hospital & Research Centre to deepen the integration of clinical and genomic health data — a sign of efforts to embed modern data architectures deep within vertical industries.

Analysts Stay Bullish, the Market Stays Skeptical

On the analyst side, the long-term direction continues to draw support. Citizens reportedly maintained its "Market Outperform" rating on Friday and kept its USD 285 price target. That stands in sharp contrast to the stock's performance so far this year, with the 24% decline reflecting persistent skepticism among many market participants.

Oracle's transformation from software specialist to the backbone of global data center architecture remains a high-risk undertaking. The bulging order books document unbroken confidence in the company's technology, but the path there runs through difficult terrain of overloaded grids and heavy interest burdens. Whether the bold bet pays off will be decided not on chip architectures alone, but at local transformer stations and in the negotiating rooms of bondholders.