They've gone in deep on AI, trying to be the supplier of choice to OpenAI and Anthropic.
They've got a Remaining Performance Obligations order book of $664 billion, such as that $300bn from OpenAI.
The announcement of those various deals hascome with massive share price spikes, in order to actually deliver on it, they need to do a hell of a lot of building.
They're spending over $95 billion a year on that build out (about triple last year), which is a lot for a company that had a fiscal 2026 full year revenue of $67bn.
They're estimating they're going to hit $90bn next year in revenue.
Their debt pile is $129bn and were planning on borrowing another $40bn this year.
All plausible but risky.
The biggest part of that $300bn with OpenAI is Project Jupiter, a 2.4GW facility in New Mexico. To give you some perspective, Ireland's entire electricity system consumed 3.7GW in the middle of the night last night. So it's the entire power demand of a small country in a single facility.
There's now issues with getting that amount of electricity available on that site by 2028.
Another company, Blue Owl are actually building it, but Oracle are on the hook to pay Blue Owl the rent from 2028, regardless of whether or not the facility has electricity. And it looks like it probably won't (technically, it's probably going a gas pipeline to enormous gas generators on site rather than massive leccy cables). Main reason is the local government have denied permission, which clearly has never happened before....
So they invoked their "Force Majuere" clause in their contracts, which is basically a handbrake on contracts that means something disastrous has happened and thus you're not going to pay. It's there to handle things like catastrophic weather events or war. It usually should be unforeseeable and uncontrollable.
Oracle having problems with not getting enough leccy to power a small country into a random site on the edge of the Chihuahuan Desert is not an unforeseeable event. Nor is running into permitting problems when building a new gas pipeline. But it also appears they didn't really have clauses that cover delays in both directions (i.e. hold off on paying rent on a half built data centre, purchasing Nvidia hardware for a data centre that's not finished or on the hook for providing GPU capacity for OpenAI who are committed to paying for it).
That Force Majeure invocation is probably not going to work, sounds like they've been far too bullish if that's the level of desperation they're getting to.
In theory, it should just be a delay till they figure out a plan B, but if you're borrowing lots of money and spending more on capital building than your company brings in a year on this stuff, it can get existential pretty quickly. The banks that hold the $18bn in loans to finance it tried to offload that debt, but it didn't work.
Hence the market is getting very nervous about the whole situation.
