Oracle’s Collapse–$200 Billion In Data Center Shut Downs
- ORCL
- AMZN
- MSFT
Quick Read
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Oracle invoked force majeure on Project Jupiter as blocked or delayed data center projects industry-wide now total up to $200 billion.
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Apollo warns that corporate debt powering the AI boom is growing riskier, driven by unproven AI revenue and costly construction delays.
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Oracle’s stock has dropped 55% over the past year, making it an early warning signal for deeper instability across the AI sector.
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Oracle (NYSE: ORCL) is in trouble. Its Project Jupiter in New Mexico has been delayed, in part, by local resistance. It has begun to take legal action to stop payments to suppliers. According to Bloomberg, “Oracle Corp. is moving to shield itself from racking up expenses on a massive data center being built in New Mexico, adding a fresh wrinkle to a project beset by opposition and regulatory setbacks.” It is just the tip of the iceberg.
Depending on who is counting, the data centers being blocked by local groups and politicians have a combined value of between $64 billion and $200 billion. Most recently, WSLS put the figure at $130 billion, but that is for construction blocked earlier this year. Earlier this week, Gizmodo put the figure at $200 billion. The Information says 500 data centers have been delayed this year.
Oracle is a small player in the data center world, at least compared to the megacaps like Amazon (NASDAQ: AMZN) and the massive private companies led by OpenAI and Anthropic. Wall St. worries it lacks the balance sheet to handle major delays. And that may be true for much of the industry, eventually.
Depending on who is counting, again, data center investments could reach $10 trillion in the next three years. That is more than double Germany’s annual GDP. Economists believe that most of US GDP growth over the same period will be AI-related. That may be revenue for the biggest AI players. It will also be the costs of data center buildouts.
Nervousness already exists about whether data center building debt is risky. As Apollo recently told CNBC regarding credit default swaps, “Corporate debt issued by the giant cloud computing players powering the artificial intelligence boom is getting riskier.” There are two risks. One is that AI will not create explosive revenue growth. That means some data center capacity will go unused and not create revenue to pay for the infrastructure. The other is delays for data centers already designed and partially paid for.
