Oracle's New Mexico Megaproject Tests the Limits of AI Ambition
Published on 09/27/2026 at 09:51 | Editorial boerse-global.de
For years, the financial world treated the construction of colossal AI data centers as a sure thing. Oracle's sprawling Project Jupiter campus in New Mexico is now exposing just how narrow the line is between technological leadership and financial overreach.
At the center of the turbulence sits a planned data-center complex intended to supply computing capacity for OpenAI. Because power delivery to the site has slipped, Oracle dispatched a force majeure notice to a unit of partner Blue Owl on Thursday. Reuters Breakingviews followed on Friday, reporting that the company could invoke an unforeseen-events clause to defer payment obligations tied to the project. One industry observer puts the potential delay at a full year.
Blue Owl was quick to stress that the parties' financial commitment remains formally intact. Even so, the maneuver carries weight: when a company with Oracle's balance sheet has to lean on force majeure, it reveals fundamental planning risks beneath the ambitious buildout. Capital alone cannot negotiate away the physical bottlenecks of the power grid.
The Site Behind the Friction
Project Jupiter occupies roughly 1,400 acres in New Mexico and is designed for a peak load of 2.45 gigawatts, primarily to serve OpenAI's computing needs. While officials insist the project remains on schedule, conditions on the ground tell a different story. The permit for a required gas pipeline has been rejected multiple times and has slipped by nearly six months. Meanwhile, air-quality approval for the backup fuel cells planned with Bloom Energy is still pending.
The financing stakes are enormous. As much as $20 billion in construction financing is in play for the New Mexico site, and those loans have already been trading at discounts in the secondary market. Morgan Stanley has warned of far-reaching risks to AI infrastructure financing across the board should construction delays pile up. The power demands of hyperscalers are overwhelming local permitting authorities and transmission networks alikeâa bottleneck that no software update can fix.
Should investors sell immediately? Or is it worth buying Oracle?
Creditors Are Repricing the Risk
The unease has moved well beyond project contracts and into the confidence of lenders. Roughly $18 billion in loans tied to the New Mexico campus were trading on September 18 at just 89 to 91 cents on the dollar. An effort to place the debt more broadly with investors stalled, according to Reuters, as market participants grow increasingly skeptical of Oracle's swelling debt load and credit standing.
That hesitation is easy to understand. BofA Global Research expects the major hyperscalers to push industry-wide investment to about $795 billion in 2026 and nearly $1.08 trillion in 2027. Oracle must keep pace in this extraordinarily capital-intensive race while operating with markedly thinner financial buffers than its dominant cloud rivals.
The pressure shows up in the credit markets. Five-year credit default swaps on Oracle have climbed to record levels, and the yield on a corporate bond maturing in 2056 has pushed past the 8% mark. Investors are starting to question how sustainable off-balance-sheet special purpose vehicles and multi-billion-dollar lease guarantees really are if the interest-rate environment stays rough and construction timelines wobble.
Record Backlog, Record Spending
Oracle's own numbers capture the tension. Its cloud infrastructure business is growing rapidly, and total order backlog recently reached $664 billion. Yet the buildout devours unprecedented sums: management is targeting capital expenditures of $90 billion to $95 billion for fiscal 2027.
Ellison's Signalâand the Market's Verdict
Against that backdrop, co-founder Larry Ellison made a notable gesture on September 12, scrapping a previously filed plan to sell up to 50 million shares worth roughly $7.5 billion. No shares had been sold by that point, and the company says Ellison has no further selling intentions. The move steadied the shareholder structure in the short term but does nothing to resolve the operational and financial challenges.
The stock tells its own story. Oracle shares closed the trading week at EUR 120.26, down 28% since the start of the year, and sit 15% below their 200-day moving average. The gap from the 52-week high stands at minus 56%.
For the broader sector, the developments around Project Jupiter mark a turning point. The phase in which announcements of ever-larger data centers were automatically rewarded with share gains is over. What replaces it is a sober recognition that the digital future ultimately rests on analog factors: transmission lines, permitting procedures and durable balance sheets. New Mexico is becoming Oracle's proving groundâand a warning signal for the entire technology industry.
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