Oracle’s Nuclear Power Deal Signals That Energy Is the New Compute Bottleneck

Oracle (ORCL) issued a force majeure notice for its New Mexico AI data center, Project Jupiter, which includes Bloom Energy's (BE) largest fuel-cell deployment. Bloom Energy shares initially dropped over 5% but have since recovered. Oracle remains committed to the project, but regulatory delays could push back revenue recognition for Bloom Energy. Citadel Securities' Ken Griffin has increased his stake in Bloom Energy over the past year.

Paramount Skydance Corp. and Oracle Corp. have increased their debt significantly, raising concerns about their ties to billionaire Larry Ellison. Investors worry about Ellison's ability to support Paramount, as much of his wealth is tied to Oracle shares. The cost to insure both companies' debt has converged, reflecting intertwined investor concerns. Oracle's debt has nearly doubled to $160 billion, and its rating was cut to BBB-.

Oracle plans to absorb $300 million in nuclear power costs for Wisconsin ratepayers by purchasing 10-20% of the Point Beach Nuclear Plant's output. The deal, pending regulatory approval, aims to reduce electricity rates for over 1 million customers of We Energies. Oracle's purchase is part of its data center development project, 'Project Lighthouse,' expected to generate $11 billion for the local economy.

Oracle (ORCL) shares rose 2% to $140.88 after announcing a managed NetApp storage service on its cloud infrastructure, aiming to ease data migration for companies. The service, set for general availability in 12 months, integrates NetApp's ONTAP capabilities. Oracle is 27.3% below its GF Value estimate, indicating potential upside if the strategy succeeds.

Tencent reportedly agreed to a $7B, five-year deal with Oracle for 100,000 AI chips in Southeast Asia, according to the Financial Times. Neither company confirmed the agreement. Tencent's Q2 capital expenditure rose 176% YoY to RMB52.8B, with free cash flow negative RMB13.8B. Oracle has expanded AI cloud capacity, delivering 300,000 GPUs and booking $30B in contracts. The deal may face regulatory scrutiny due to US export controls on remote access.

Oracle Corp. (NYSE:ORCL) 20-year bonds yield 8.11%, reflecting high borrowing costs amid aggressive AI investments. The company's capital expenditures surged 235% YoY, leading to negative free cash flow. Management expects $90B-$95B in capital spending for fiscal 2027, with $40B in debt/equity raised. S&P, Moody's, and Fitch rate Oracle's debt as investment grade. Oracle shares would need to reach ~$625 by 2046 to match the bond yield, a 4.5x increase from current levels.