Oracle’s $18 Billion AI Data-Center Debt: Is the AI Buildout Becoming Too Leveraged?

Educational research only — not investment advice.

Oracle stock is becoming a major test of whether the AI infrastructure boom is taking on too much debt.

Around $18 billion of loans linked to Oracle’s planned Project Jupiter data center in New Mexico are now trading below their original value.

The problem is simple:

AI demand is booming—but building the infrastructure requires enormous amounts of capital.

What Is Project Jupiter?

Project Jupiter is a huge AI data-center development planned in New Mexico.

The project is connected to Oracle’s expanding cloud partnership with OpenAI and forms part of the infrastructure needed to run increasingly powerful AI models.

Banks including Santander and Jefferies helped arrange roughly $18 billion of financing.

But those loans are now being quoted at around 89 to 91 cents on the dollar, showing investors want a discount before taking the risk.

Why Is the Debt Under Pressure?

There are several concerns.

Oracle is already borrowing heavily to finance its AI expansion.

Reuters reported that Oracle had around $129.5 billion of debt and roughly $260 billion of long-term data-center lease commitments earlier this year.

At the same time, free cash flow has weakened because infrastructure spending is rising rapidly.

That creates a difficult equation:

more AI investment → more future revenue potential → more debt today

Investors now want proof that the future revenue will justify the financing.

Oracle Is Close to Junk Status

Credit-rating agencies are becoming more cautious.

S&P downgraded Oracle to BBB-, only one level above speculative-grade or “junk” status.

That matters because a further downgrade could make borrowing more expensive.

Higher interest costs would make the economics of future data-center projects less attractive.

For a company spending tens of billions on infrastructure, even a small increase in financing costs can become significant.

The New Mexico Project Has Other Problems

Debt is not the only issue.

Project Jupiter also faces local opposition over:

  • water consumption
  • air pollution
  • power generation
  • environmental permits

Plans for a natural-gas pipeline serving the facility’s proposed 2.2 gigawatts of gas-powered generation have faced regulatory difficulties.

Delays matter because debt continues to cost money even when a project is not producing revenue.

That increases execution risk.

Why OpenAI Matters

Oracle’s AI expansion is closely tied to expected demand from OpenAI.

That creates enormous potential—but also concentration risk.

Reuters has reported that about half of Oracle’s huge future revenue backlog is linked to OpenAI-related business.

OpenAI itself is spending heavily.

The company reportedly expects cumulative cash burn of around $278 billion between 2026 and 2030 as it expands computing capacity.

That means the AI infrastructure ecosystem increasingly depends on several companies continuing to raise enormous amounts of capital.

Is the AI Boom Becoming Too Leveraged?

Not necessarily—but the financing structure is changing.

Earlier AI growth was largely funded by cash-rich technology giants.

Increasingly, the industry is using:

corporate debt + project loans + leases + private credit

to fund data centers, power infrastructure and chips.

Global AI infrastructure spending is expected to approach $795 billion in 2026 and could exceed $1 trillion next year.

As those numbers grow, lenders will become more selective.

What Should Investors Watch?

Watch Oracle debt, free cash flow, credit ratings, AI capital spending and Project Jupiter delays.

The key question is:

Can Oracle’s AI revenue grow fast enough to justify the debt needed to build the infrastructure?

If revenue and cash flow catch up, the leverage may look manageable.

If projects are delayed or AI spending slows, debt could become a much bigger problem for Oracle stock.

Track AI Infrastructure Risk With TradingSimuLab

TradingSimuLab’s Macro and Risk tools help users study changing technology spending, financial conditions and market risk.

For more quantitative market research and educational trading tools, sign up to TradingSimuLab.

TradingSimuLab is for educational and research purposes only and does not provide investment advice.

Continue exploring TradingSimuLab.

  • DRAM Stocks Explained: Why AI Is Creating a New Memory-Chip Boom

    AI is creating a new boom in memory chips—not just GPUs. As AI data centers expand, servers require huge amounts of DRAM to store and rapidly access data. That is tightening memory supply and increasing prices. For investors, companies such as Micron, Samsung and SK Hynix have therefore become important parts of the AI infrastructure…

  • AI Bubble Explained: Are AI Stocks Finally Facing an Expectations Reset?

    AI stocks have created enormous wealth—but investors are beginning to ask whether expectations have moved too far ahead of reality. On September 14, semiconductor stocks sold off sharply, with the PHLX chip index falling 5.9% as Nvidia, AMD, Broadcom and Micron came under pressure. At the same time, investors face a bigger question: Is AI…

  • Fed Rate Decision Explained: Why One Rate Hike Can Move Stocks, Bitcoin and Gold

    Few events move global markets as quickly as a Federal Reserve interest-rate decision. The Fed is widely expected to raise rates by 0.25 percentage points on September 16, 2026, taking its benchmark range to 3.75%–4.00%. But why can one small rate move affect stocks, Bitcoin, gold and bonds at the same time? Because the Fed…

  • 10-Year Treasury Yield Above 5%: Why High Bond Yields Can Hit Stocks Hard

    The U.S. 10-year Treasury yield has crossed 5%, creating a major new test for stocks. On September 15, 2026, the benchmark yield rose above 5.02%, its highest level since 2007. Rising oil prices, inflation concerns and heavy bond supply have all contributed to the move. Why should stock investors care? Because a 5% Treasury yield…

  • MAS Monetary Policy Explained: Why Singapore Uses the Exchange Rate Instead of Interest Rates

    Singapore runs monetary policy differently from most major economies. The U.S. Federal Reserve changes interest rates. The European Central Bank changes interest rates. But the Monetary Authority of Singapore (MAS) mainly manages the Singapore dollar’s exchange rate. Why? Because Singapore is a small, highly open economy where imports and exports are enormous relative to GDP.…

  • Singapore IPO Reality Check: Why New Listings Can Fall Below Their IPO Price

    Singapore IPO Reality Check: Why New Listings Can Fall Below Their IPO Price An IPO price is not a guarantee of what a stock is worth after listing. Singapore’s IPO market has become much more active in 2026, but many new listings have struggled once public trading began. By early September, seven of eight companies…

  • Tokenized Stocks Explained: Why Wall Street and Traditional Exchanges Are Moving On-Chain

    Stocks are beginning to move onto blockchain infrastructure. Nasdaq, the London Stock Exchange, Kraken and other major financial firms are developing ways to represent traditional equities as digital tokens. The idea is called stock tokenization. Supporters see benefits such as longer trading hours, fractional access and potentially more efficient settlement. But tokenized stocks also introduce…

  • Crypto Regulation Watch: Why the CLARITY Act Could Move Bitcoin and Altcoins

    U.S. crypto regulation is approaching a major test. The Senate is preparing for a key procedural vote on the CLARITY Act, legislation designed to create clearer rules for digital assets. For crypto markets, the important issue is not politics itself. It is regulatory certainty. Clearer rules could influence: But the legislation has not yet cleared…

  • Bitcoin Near $80,000: Fed Rate Hike vs ETF Demand—Which Force Wins?

    Bitcoin is approaching another major test as bullish crypto demand collides with tighter U.S. monetary policy. After recovering sharply from its 2026 lows, traders are again focusing on the $80,000 area. At the same time, the Federal Reserve is widely expected to raise interest rates this week. That creates two competing forces: ETF and institutional…