Oracle's New Mexico Data-Center Financing Feels the Strain as Cloud Expansion Rolls On

Oracle's $18B Project Jupiter data center debt trades at 89-91 cents as lenders question AI buildout financing; cloud wins continue.

Oracle finds itself navigating a split-screen reality: while its cloud business notches fresh wins, the financing machinery behind one of its flagship AI infrastructure bets is drawing uncomfortable scrutiny from lenders and investors alike.

At the center of the unease is "Project Jupiter," a data-center campus in New Mexico being developed by STACK Infrastructure—a unit of Blue Owl Capital—and earmarked for OpenAI. Oracle has issued a force majeure notice to STACK, a move designed to secure a payment deferral should the facility miss its targeted 2028 opening date. The trigger: looming delays in power supply and regulatory obstacles standing in the way of a natural-gas pipeline.

Oracle insists the project remains on schedule, and Blue Owl has stressed that the letter does not alter the contractual financial obligations of either party. Even so, Reuters reported that the maneuver has sown doubt among bankers and investors about the financial viability of large-scale AI construction more broadly.

Credit Markets Flash Warning Signs

The strain is most visible in the debt markets. According to the Financial Times, loans tied to the roughly $18 billion project are trading at just 89 to 91 cents on the dollar in secondary markets. A consortium of more than 20 banks structured the debt for the buildout.

Investors are also weighing Oracle's downstream obligations. Media reports indicate the company remains on the hook for certain ongoing financing costs even if the facility comes online late. The prospect of a completed data center sitting idle because its grid connection isn't ready has added a palpable layer of nervousness to the market.

The equity has felt the pinch. Oracle shares shed 1.9% on Friday to close at EUR 120.26, having earlier dropped as much as 3.5% intraday as the reports circulated. A separate reading put the stock down 0.9% at EUR 121.50. Year-to-date, the paper has lost 28%—with one tally putting the decline at 27%.

Analysts See Limited Near-Term Damage

Not everyone is sounding the alarm. William Blair characterized the short-term burdens as manageable, pointing out that the new site was never expected to contribute revenue in fiscal 2027 anyway. Co-CEO Clay Magouyrk made a similar case roughly two weeks ago at the quarterly earnings presentation, stating that guidance for that fiscal year remains untouched by these developments.

Still, the episode lays bare the mounting risks baked into building colossal AI infrastructure. The complex is slated to carry an energy capacity of 2.45 gigawatts. After the New Mexico State Land Office denied permits for a pipeline owned by Energy Transfer, its completion slipped by nearly six months to February 1, 2027. Slow permitting and power-capacity bottlenecks are increasingly looking like structural headwinds for the broader data-center buildout.

Cloud Partnerships Keep Rolling

None of this has slowed Oracle's operational momentum on the cloud front. The company unveiled functional extensions to its multicloud offerings: the Oracle AI Database is now available on Google Cloud at the Turin location, while its Amazon Web Services service gained an additional zone in northern Virginia.

Earlier in the week, Oracle struck a partnership with Wild Bioscience, which will use the company's cloud and IoT services for AI-driven field research aimed at improving crop resilience and carbon sequestration. On Wednesday, Oracle rolled out functional enhancements to its Digital Assets Data Nexus, including smart-contract controls and a connection to the Swift Ledger for banking clients.

For shareholders, though, the dominant risk factor remains clear: whether Oracle can execute on—and finance on time—its long-term data-center capacity ambitions.