Oracle's New Mexico Data-Center Bet Sends $18 Billion in Loans Slipping Below Par
Published on 09/21/2026 at 12:30 | Editorial boerse-global.de
Lenders holding roughly $18 billion of debt tied to Oracle's leased data-center campus in New Mexico are watching those positions trade at a discount, a sign that the financing behind one of the company's flagship AI buildouts has run into turbulence.
Syndicate banks including Santander and Jefferies were quoting the loans at just 89 to 91 cents on the dollar late last week, according to media reports. Pricing that far below face value points to mounting doubts about whether the sprawling project can be delivered on schedule.
Project Jupiter Stalls on Permits and Local Pushback
The center of gravity for those concerns is "Project Jupiter," a roughly 1,400-acre campus in Doña Ana County that anchors Oracle's agreement with OpenAI to supply vast computing capacity for artificial-intelligence workloads. Resistance on the ground has been fierce: residents and environmental groups have raised serious questions about water supply and air quality.
Regulatory roadblocks have compounded the delays. New Mexico's State Land Office rejected the permit application for a natural-gas pipeline that was meant to feed 2.2 gigawatts of gas turbines. A fallback plan built around fuel cells also ran into pipeline obstacles. Market observers now estimate the first construction phase is running at least seven months behind its original timetable.
Banks Left Holding More of the Risk
The lending consortium extended the multibillion-dollar facility late last year to lock in the start of construction, intending to syndicate the debt onward to a wider pool of institutional investors. That distribution has stalled.
Should investors sell immediately? Or is it worth buying Oracle?
Oracle's weakened credit profile is part of the problem. S&P downgraded the software maker to BBB- in July, leaving it just one notch above junk territory. As a result, the syndicate banks are being forced to keep more project-related loans on their own books than they had planned. Barclays analysts have already flagged concerns about Oracle's data-center schedule, singling out the risks surrounding the New Mexico site.
Software Momentum Offers a Counterweight
Against that financing strain, Oracle has been pushing hard on the product side. In mid-September it rolled out Java 27, a broad update to its software platform aimed squarely at post-quantum cryptography and artificial intelligence. Around the same time, it launched a dedicated AI agent in the U.S. to help hospital staff, easing the documentation burden on nurses.
Those moves mark a welcome shift in emphasis — away from simply pouring money into expensive data centers and toward embedding AI in the daily workflows of enterprise customers. The timing matters, since the real payoff from AI ultimately gets decided in how users actually work, not in how much capital gets committed to server farms. If Oracle can link its widely installed database and programming base with intelligent automation, it stands to build a durable competitive edge.
Wall Street Stays Cautious
Sentiment in the markets remains guarded. On September 11, BMO Capital Markets cut its price target to $195 while keeping an "Outperform" rating. Such measured trims reflect persistent analyst unease: demand for cloud resources is real, but the transition is soaking up enormous capital, and many observers want hard proof that the aggressive spending won't erode margins in the years ahead.
Management has responded with blunt cost-cutting. A fresh round of layoffs began just over a week ago, with media reports suggesting as many as 10,000 positions could go. Oracle now puts the total cost of its restructuring program at roughly $2.8 billion. The cuts are painful for those affected, but the strategic pivot leaves little room for expensive excess capacity in legacy business lines.
Cloud Growth Doubles as the Stock Lags
The pace of that transformation shows up clearly in the latest interim results. Cloud is doing the heavy lifting: in the first quarter of fiscal 2027, infrastructure revenue climbed to $7.4 billion, double the year-earlier figure. That surge suggests enterprise customers increasingly treat Oracle as a full-fledged alternative to the major hyperscalers, with high-performance server capacity paired with deeply integrated database services becoming a potent selling point in the contest for demanding AI projects.
Oracle at a turning point? This analysis reveals what investors need to know now.
The equity, however, has yet to reflect that optimism. Oracle shares closed Friday at EUR 128.70, down 23% since the start of the year. The stock was trading at EUR 129.00 today, up 0.4%, though it remains 54% below its 52-week high — a gap that captures how much skepticism the transformation has stirred among investors.
Quarterly figures released last Thursday laid bare the heavy capital outlays for new data centers, and the shares have slipped 1.7% since. The earlier layoff round, by contrast, has been rewarded: the stock has gained 3.0% since that announcement, underscoring the strict cost discipline Oracle is applying outside its infrastructure buildout.
For all the turbulence, the case for the bulls still rests on Oracle's software initiatives, which show a company operating at the technological frontier and defending its interface with customers. If leadership can see the restructuring through with discipline, the current weakness in the share price may yet prove overdone.
Ad
Oracle Stock: New Analysis - 21 September
Fresh Oracle information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.
