Oracle’s massive push to build the infrastructure powering the artificial-intelligence boom is running into an increasingly complicated problem: the financing behind one of its biggest data-center projects is coming under pressure just as local opposition and regulatory hurdles intensify.
About $18 billion in loans tied to Project Jupiter, a large Oracle-leased data-center campus in Doña Ana County, New Mexico, were being quoted at roughly 89 to 91 cents on the dollar by syndicate banks including Santander and Jefferies, according to the Financial Times. Loans trading below face value indicate that investors are demanding a higher return for taking on the perceived risks, although the development does not mean Oracle has defaulted on the debt.
The development puts a spotlight on one of the biggest challenges facing the AI infrastructure boom: how to finance hundreds of billions of dollars of data centers while projects simultaneously face power constraints, permitting delays, environmental objections and growing scrutiny from investors.
The $18 Billion Project At The Center Of The Storm
Project Jupiter covers roughly 1,400 acres in Doña Ana County and is designed to provide computing capacity connected to Oracle’s major agreement with OpenAI.
The project secured approximately $18 billion in financing from a consortium of banks late last year. But efforts to distribute the debt more broadly to other investors have reportedly stalled, leaving banks holding more Oracle-related exposure than they originally expected.
Reuters independently confirmed the Financial Times’ report that the loans were being quoted at 89 to 91 cents on the dollar and said investor concerns include Oracle’s rising borrowing requirements and weakening credit profile.
The issue is particularly significant because Oracle is spending at an extraordinary pace to build AI infrastructure.
Oracle’s AI Spending Is Exploding
Oracle has dramatically increased its capital requirements as it attempts to compete in cloud computing and capitalize on demand for AI processing.
The company has forecast up to $95 billion in capital expenditure for fiscal 2027, although it expects customers to reimburse as much as $25 billion of that spending. Oracle spent approximately $55.7 billion in fiscal 2026, above its earlier target of $50 billion.
That spending has produced a fundamental Wall Street question:
How much debt can Oracle take on while continuing to build AI infrastructure at this speed?
S&P downgraded Oracle in July, leaving its corporate credit rating only one notch above junk, according to Reuters and the FT.
That does not mean Oracle is in financial distress or unable to fund its operations. But it does mean that the cost and availability of financing have become increasingly important considerations for investors.
The New Mexico Problem Is Bigger Than Debt
The financing pressure is arriving at the same time that Project Jupiter is facing a battle over its physical infrastructure.
The original plan called for the facility to be powered by 2.2 gigawatts of gas turbines. A request to run a natural-gas pipeline to the site was blocked by the New Mexico State Land Office, according to Reuters.
Oracle subsequently moved toward a different strategy involving Bloom Energy fuel cells.
Oracle says the redesigned system would reduce nitrogen-oxide emissions by approximately 92% compared with the previous gas-turbine plan and significantly reduce water consumption. The company says the updated design will use non-potable water for startup and maintenance and will not use potable water for cooling or fuel-cell operation.
But the alternative power system has also encountered regulatory obstacles.
The New Mexico Department of Justice recently backed emergency petitions challenging aspects of the Project Jupiter permitting process. The state attorney general’s office said the dispute involves both water and air-permitting issues.
Water Has Become A Major Flashpoint
Water is one of the most sensitive issues surrounding large data-center developments in the American Southwest.
New Mexico is already dealing with water constraints, and opponents of Project Jupiter have questioned how much water the development could require.
A recent Albuquerque Journal poll cited by local television station KOAT found that 65% of respondents opposed large-scale data-center development in the state, while 20% supported it. The poll also found respondents who were undecided or said their position depended on the circumstances.
There are also formal disputes surrounding water rights connected to the project.
The New Mexico attorney general’s office said one water-rights dispute involves a well that had pumped more than 100 million gallons from the Lower Rio Grande Basin, while KOAT reported that more than 30 protests had been filed over a replacement well.
These disputes do not establish that Project Jupiter has violated environmental law. They show, however, how the project’s water requirements have become a major point of regulatory and community scrutiny.
The Air Permit Fight Is Still Unfolding
Project Jupiter’s proposed power infrastructure also requires environmental review.
The New Mexico Environment Department scheduled a public hearing on the project’s air-quality permit after substantial public interest and complaints surrounding the permitting process.
The state’s attorney general has separately challenged aspects of the permitting process, arguing that state agencies did not adequately follow required procedures. Those are legal and administrative allegations that remain subject to the relevant proceedings.
Oracle disputes the characterization that construction of the data center itself has been halted by the air-permit dispute.
In a September 14 statement, Oracle said the data-center campus and the proposed microgrid are separate facilities, and that construction of the data-center buildings is proceeding under county permits that do not require the disputed air permit. Oracle said the microgrid remains subject to its own regulatory review.
That distinction matters.
The current controversy is therefore not simply “Oracle’s data center is blocked.” Rather, different parts of the overall project face different permitting and legal processes.
Oracle Says The Project Is Bringing Billions To New Mexico
Oracle has pushed back against criticism by emphasizing the economic benefits it says Project Jupiter is already generating.
The company said in July that the project had generated nearly $80 million in tax revenue and was expected to create more than $4.7 billion in long-term economic impact for New Mexico and Doña Ana County.
Oracle also said nearly 700 New Mexico residents had worked on the project and that construction could eventually support more than 7,000 jobs, with roughly 1,500 ongoing project-supported jobs once the campus is operational.
The company has also committed $50 million toward local water infrastructure, according to its July announcement.
Those figures are Oracle projections and company-reported economic estimates, rather than independently verified measurements of the project’s ultimate economic impact.
Oracle has also announced plans for a public environmental dashboard that would provide information about the campus’s water use, noise, heat, light and emissions, with independent third-party assessments planned.
The AI Boom Is Creating A New Kind Of Financing Risk
Project Jupiter illustrates a broader transformation in technology finance.
AI companies and cloud providers are building data centers on a scale that requires enormous amounts of capital. Rather than funding every project solely with corporate cash, developers and technology companies are increasingly turning to project finance, bonds, loans and other forms of outside capital.
That creates a new chain of risk.
If AI demand continues to grow rapidly, these enormous facilities could generate substantial revenue and justify their financing.
But if construction is delayed, power connections are blocked, permits take longer than expected or investors become less willing to finance highly leveraged infrastructure, the economics can become much more complicated.
The pressure on Project Jupiter’s debt is therefore being watched beyond New Mexico.
Oracle’s Stock Has Also Taken A Hit
Oracle’s financial position has come under additional scrutiny because its shares have fallen sharply since the company announced its massive OpenAI agreement.
The Financial Times reported that Oracle’s stock had fallen about 50% since the announcement of the $300 billion OpenAI deal, while co-founder Larry Ellison recently canceled a previously disclosed $7.5 billion share-trading plan without giving a public explanation.
The share-price decline does not by itself prove that Oracle’s AI strategy is failing.
Indeed, Oracle continues to report strong demand for its cloud infrastructure, and its latest quarterly results exceeded Wall Street revenue expectations. Reuters reported that the company continues to see substantial growth in its AI-related cloud business.
The challenge is that strong demand does not automatically eliminate the financing risk created by enormous upfront infrastructure costs.
A Seven-Month Delay Adds Another Layer Of Pressure
Project Jupiter was originally expected to begin operating in November 2026.
Market intelligence firm SynMax estimates that the project’s initial phase is now at least seven months behind its proposed schedule, according to the Financial Times.
For an ordinary construction project, a delay can be costly.
For an AI data center financed with billions of dollars of debt, delays can have an even greater financial impact because capital is committed before the facility begins generating its expected operating revenue.
That makes the timing of construction, power approvals and regulatory decisions increasingly important for both Oracle and its lenders.
The Bigger Question: Can AI Infrastructure Keep Borrowing At This Scale?
Project Jupiter is becoming a test case for the economics of the AI infrastructure boom.
The technology industry is racing to build computing capacity because AI models require enormous amounts of electricity, specialized chips and data-center space.
Oracle is one of the companies trying to capture that demand.
But the New Mexico project shows the other side of the equation: AI infrastructure still has to be financed, permitted, powered and accepted by the communities where it is built.
The $18 billion loan package has not collapsed. Oracle has not defaulted. And the Project Jupiter campus is not simply “dead.”
Instead, investors are now confronting a more complicated question:
Can the AI boom generate enough long-term economic value to justify the extraordinary amount of debt and infrastructure spending required to build it — even when local opposition and regulatory delays push projects behind schedule?
For Oracle, the answer could determine not only the future of Project Jupiter, but how confidently Wall Street finances the next generation of AI data centers.
And that is why the market is watching an $18 billion loan package in New Mexico far beyond the state’s borders.
