Oracle Stock Falls 7% as Project Jupiter Financing Weighs on Investors
Oracle shares fell 7% even after Mizuho reiterated its outperform rating and $320 valuation. Investors are weighing the cost of Project Jupiter, a proposed…
Oracle stock price fell 7% by 10:10 a.m. ET, despite Mizuho analyst Siti Panigrahi reiterating an “outperform” rating and saying he still valued the shares at $320. The decline puts investor concern over the cost and financing of Oracle’s Project Jupiter in focus as the company pursues a proposed change to the data center’s power supply.
Panigrahi said Oracle had made “continued construction progress” on Project Jupiter, an artificial intelligence data center under construction in New Mexico. The company has proposed rerouting a gas pipeline that supplies power to the site through Bloom Energy fuel cells, aiming to avoid restarting its environmental review.
Investors are not waiting comfortably. The source report said Panigrahi expects further updates on Oct. 28, while Oracle’s shares fell after his positive assessment.
That is the immediate tension. A favorable analyst rating has not eased concern about the project’s financing.
Project costs and debt weigh on Oracle stock price
Oracle recently received a credit rating downgrade to BBB-, one notch above speculative, according to StreetInsider.com as cited in the report. The downgrade reflected concern that Oracle is committing too much capital to Project Jupiter before the investment produces enough revenue to offset its costs.
OpenAI is not required to make payments for the data center before 2027, the report said. That timing leaves Oracle carrying project expenses in the meantime, while investors assess whether its cash and borrowing capacity can support the spending.
Data from S&P Global Market Intelligence cited in the report show Oracle with $37.1 billion in cash and an annual cash burn of nearly $29 billion. The company also faces the possibility of adding to its $169.1 billion debt load.
Those figures help explain why the share decline matters beyond a single trading session. The project’s scale and the gap before payments begin place attention on Oracle’s near-term finances, even as an analyst argues the stock may be undervalued. For shareholders, the question is whether the company can sustain the investment long enough for the project to generate value.
Investors await the next project update
Panigrahi remains optimistic that Oracle’s effort to reroute the pipeline will succeed, according to the report. The proposed change is intended to avoid restarting an environmental review, but the source did not describe the outcome as settled. Investors are due to receive further updates on Oct. 28.
The report also noted that OpenAI’s payments for the data center are not required before 2027. That leaves a period in which Oracle must fund construction without those payments, while the company’s debt and cash position remain central concerns.
Mizuho’s $320 valuation and outperform rating offer a positive view, but the market response shows investors are focused on execution and financing risks. The report did not provide a closing share price or say how Oracle shares traded after 10:10 a.m. ET.
The next update on Oct. 28 is expected to give investors more information about the pipeline proposal and Project Jupiter’s progress.
Source: finance.yahoo.com
