Oracle's Nuclear Power Deal and $7 Billion Tencent Contract Test the Limits of Its AI Infrastructure Bet

Oracle closed at EUR 126.50, up 2.9%, but questions over funding AI data centers, power supply and regulatory hurdles keep the stock down 24% this year.

Oracle shares climbed 2.9% on Friday to close at EUR 126.50, lifted by a broad improvement in sentiment across the technology sector. Yet the day's gain does little to resolve the deeper question now hanging over the company: how it intends to finance and physically deliver the enormous computing capacity that its AI ambitions demand.

The market's focus has shifted well beyond software licenses and AI announcements. Attention now centers on the physical layer of the business — who secures data centers, vast amounts of electricity, and scarce processors in time. Oracle has positioned itself squarely in the middle of that tectonic shift, attempting to set the course for the next phase of cloud infrastructure.

Power and Compute as the New Currency

The growing entanglement of technology expansion and traditional infrastructure is most visible in energy. Oracle announced an agreement to draw electricity from the Point Beach nuclear power plant. The arrangement is expected to save power customers in the US state of Wisconsin roughly USD 300 million in fuel costs, though it still requires approval from the Public Service Commission of Wisconsin.

That regulatory dependency is now a recurring feature of Oracle's expansion. The company's plans increasingly hinge on decisions made by authorities over which it has no control.

Meanwhile, reports of large international contracts have drawn attention. According to media accounts, Tencent Holdings plans a five-year leasing agreement for Oracle data centers in Southeast Asia covering around 100,000 modern AI chips. The total value of the deal is estimated at approximately USD 7 billion, with a prepayment of roughly one-third. Reuters noted that the figures could not be independently verified, as both companies left inquiries unanswered.

The scale of such projects makes clear that cloud capacity has reached the status of a strategic raw material. Unconfirmed reports and regulatory hurdles counsel caution, but the direction is unmistakable: anyone hoping to compete in the global race for capacity must commit billions and overcome physical obstacles.

Flooding at Project Jupiter

That physical vulnerability was on display at the Project Jupiter campus in southern New Mexico, where flooding reached the site. Oracle and its partner STACK Infrastructure said no critical infrastructure was damaged and that the construction timeline for the AI data center remains intact.

Even so, the incident underscored how exposed large data-center construction sites are to weather. Separately, a security vulnerability in Oracle PeopleSoft more than a month ago served as a reminder of legacy issues in the company's traditional software business. Google's Mandiant reported a renewed wave of attacks by ShinyHunters targeting unsecured systems across multiple sectors.

Insider Buying and a Mixed Analyst Picture

Against this backdrop of operational challenges, management sent a notable signal. Stephen H. Rusckowski, a director at Oracle, acquired 25,000 shares through his Living Trust on the open market, according to a mandatory filing with the US Securities and Exchange Commission. The purchase was made at a weighted average price of USD 139.352 per share.

Such buying tells the market that executives have faith in the company's long-term potential. A single share purchase, however, does not offset the far-reaching risks of the transformation.

Oracle is also pursuing strategic partnerships beyond its core IT business. 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. Such collaborations illustrate the effort to embed modern data architectures deep within vertical industries.

On the analyst side, the long-term direction continues to draw support. According to media reports, Citizens maintained its "Market Outperform" rating on Friday and kept its price target of USD 285. That stands in sharp contrast to the stock's performance so far this year: shares are down 24% since the start of the year, reflecting persistent skepticism among many market participants.

Oracle is increasingly slipping into the role of a hardware and energy infrastructure operator. In doing so, it is trading the predictable ease of the licensing business for heavy capital commitment. The recent recovery, carried along by the broader market, gives the stock a breather but does not remove the structural challenges. Until it is proven that the new AI contracts can support margins, caution is warranted.