Oracle's Tencent Megadeal Lifts the Stock, but New Mexico's Floodwaters Expose a Deeper Fault Line
Published on 10/01/2026 at 14:20 | Editorial boerse-global.de
Oracle shares are getting a reprieve. After a bruising stretch that has left the stock down sharply on the year, the enterprise software and cloud giant is drawing fresh bids on two fronts: a reported blockbuster leasing arrangement in Asia and word that its flagship data-center campus escaped a natural disaster largely unscathed.
The equity changed hands at EUR 123.98 in recent trading, a gain of 2.3%, as investors digested a Financial Times report that Chinese technology heavyweight Tencent has signed a five-year leasing contract worth roughly USD 7 billion. Under the arrangement, Tencent would secure access to approximately 100,000 advanced AI chips, with the compute delivered through Oracle data centers located in Southeast Asia. About 30% of the contract's value would be paid upfront, according to the report.
Neither Oracle nor Tencent has publicly confirmed the transaction, and Reuters said it could not independently verify the details.
An offshore workaround with political teeth
If accurate, the deal carries strategic weight beyond its headline figure. Keeping the physical silicon outside mainland China allows Tencent to sidestep Washington's tight restrictions on direct semiconductor exports to Chinese firms — a route that is almost certain to draw scrutiny from U.S. regulators. Should authorities move to clamp down on compute provision abroad as well, Oracle could find itself holding the bag on the hefty upfront outlays required to service the contract.
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For now, the arrangement broadens the customer base for Oracle's infrastructure arm, which has leaned heavily on a handful of Western partners such as OpenAI. That division posted a 121% revenue jump to USD 7.4 billion in the first quarter of fiscal 2027, and the Tencent tie-up — with its sizable prepayment — would supply both diversification and much-needed liquidity.
Project Jupiter: dry ground, but a wet blanket on the timeline
The company also moved to calm nerves over its most closely watched construction site. Following flooding that reached the grounds of Project Jupiter in New Mexico, Oracle and partner STACK issued a joint statement confirming that no critical infrastructure had been damaged and that the construction schedule remains on track. The reassurance follows days of market jitters sparked by reports that Oracle had invoked force majeure with the developer to shield itself from penalty costs tied to missed deadlines.
Still, the project — a USD 165 billion campus designed for 2.45 gigawatts of capacity — is already running months behind its original timeline. Lenders appear to share the concern: an USD 18 billion bank-provided credit facility for the build was recently quoted at around 90 cents on the dollar, a clear signal of creditor unease.
A comparable picture is emerging at Project Lighthouse in Wisconsin, where disputes over permits and high-voltage grid connections are slowing construction. When the power supply arrives months or even years late, the competitive advantage Oracle hopes to capture in the AI race erodes accordingly.
Spending at full throttle, skepticism at the door
The scale of Oracle's commitment is staggering. Capital expenditure alone reached USD 28.5 billion in the first quarter of fiscal 2027, underscoring the balance-sheet strain behind its infrastructure promises. With the stock down 25% year-to-date — and some measures putting the decline at 26% — the market is already pricing in a healthy dose of doubt.
Morgan Stanley maintains an "Equal Weight" rating on the shares while noting meaningful upside potential on paper. The coming quarters will determine whether Oracle can sustain its breakneck investment pace without further operational setbacks. The Tencent contract proves demand for Oracle's cloud capacity is real, but a signed agreement is worth little if the data centers behind it cannot connect to the grid — or if new export rules pull the rug out from under the model entirely.
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