Oracle's Nuclear Power Play Exposes the Fault Lines Beneath Its AI Spending Spree

Oracle's Point Beach nuclear deal and $11B Project Lighthouse face grid delays, while Moody's flags rising debt-like data-center leases.

Oracle shares advanced 2.9% to EUR 126.50 across European trading venues, lifted by a softer-than-expected US jobs report that eased rate anxiety and pulled blue chips higher on Wall Street. Yet the day's headline gain sits awkwardly beside a far more consequential development: the software giant is now staking its data-center ambitions directly on a nuclear reactor — and the financial machinery underpinning that bet is drawing scrutiny from credit analysts and lenders alike.

The agreement unveiled with utility We Energies commits Oracle to purchase a portion of its electricity from the Point Beach nuclear plant and to shoulder the full energy costs of its planned "Project Lighthouse" campus in Port Washington, Wisconsin. For more than a million Wisconsin ratepayers, the arrangement is projected to save roughly USD 300 million in fuel costs. The deal still requires approval from the Public Service Commission of Wisconsin, and market watchers are already flagging potential delays in grid interconnection. Oracle had originally targeted power delivery from 2027, while independent estimates suggest meaningful supply for the USD 11 billion project may not arrive until mid-2028.

A Balance Sheet Under Strain

The nuclear pact illustrates the sheer scale of the obligations Oracle is accumulating. Capital expenditure alone reached USD 28.499 billion in the most recent quarter, with the finance department guiding toward a staggering USD 90 billion to USD 95 billion for the full fiscal year. Moody's has taken note, assigning Oracle a "Baa2" rating with a negative outlook — just two notches above junk status — citing rapidly growing, debt-like lease commitments for data centers across the industry.

That tension between spending and financing is not confined to Wisconsin. At the "Project Jupiter" megaproject in New Mexico, delays to the campus power supply are looming, and according to media reports, a formal step could allow the company to defer rental payments should construction stall. Reuters Breakingviews observed that the move has rattled creditors across the AI sector, exposing the funding risks embedded in the broader buildout. The episode lays bare a structural vulnerability: enormous energy demand for modern computing campuses is colliding with slow grid connections and power shortages, and contractual commitments can quickly run into physical infrastructure limits.

Demand Signals and Analyst Divergence

On the demand side, reports from the Financial Times and Reuters indicate that Chinese conglomerate Tencent is planning a five-year lease for roughly 100,000 AI chips in Oracle data centers in Southeast Asia, with a volume estimated at around USD 7 billion. Neither company has confirmed the contract. If realized, it underscores the strategic bind facing cloud providers: recouping colossal investments requires landing global anchor tenants, even as geopolitical screening increasingly complicates cross-border access to advanced chip capacity.

Wall Street remains divided on the balance. Citizens reaffirmed its "Market Outperform" rating with a USD 285 price target, while Freedom Broker trimmed its target to USD 205 on margin concerns but kept its "Buy" rating. In a separate show of confidence, Oracle board member Stephen Rusckowski bought 25,000 shares on the open market Tuesday at USD 139.35 apiece — a signal that insiders are weighing long-term operating substance above near-term market doubts.

Product momentum continues as well. Oracle is preparing a fully managed cloud storage service for AI and enterprise workloads in partnership with NetApp, has expanded its financial-crime portfolio with agent-based AI capabilities, and has connected platforms to Swift's blockchain network.

The Verdict From the Market

In German trading, the stock changed hands at EUR 124.92, a daily gain of 1.7%. The broader trend tells a more sober story: shares are down 24% to 25% year-to-date, with the market already pricing in persistent execution challenges. Until it becomes clear how smoothly megaprojects like Project Jupiter can connect to the grid, investors would be wise not to mistake a single friendly session for a lasting turnaround. Oracle's nuclear bet shows how unconditionally the company has tied its future to the AI card — whether the math works depends less on algorithms than on whether the power actually flows on time.