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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.

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