Oracle (ORCL) Stock Tumbles as Wall Street Eyes an $18 Billion Debt Problem

TLDR

• Oracle shares fell 3.4% Wednesday afternoon and closed near $139.59, down 3.6% on the day.
• The company sent a force majeure notice to a Blue Owl Capital unit building its Project Jupiter data center in New Mexico.
• Oracle’s credit default swaps hit a record high and its 2056 bond yield topped 8% for the first time.
• About $18 billion in Project Jupiter loans are trading below face value.
• Wall Street still rates ORCL a Strong Buy, with an average price target of $245.75.

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Oracle stock dropped 3.4% in afternoon trading Wednesday, closing near $139.59 after the company sent a force majeure notice tied to its Project Jupiter data center. The notice was addressed to a unit of Blue Owl Capital, the developer building the New Mexico site.

Oracle Corporation, ORCL

CNBC first reported the news, citing an earlier Bloomberg story. Oracle wants the option to delay payments on the campus if it doesn’t open on schedule in 2028.

Project Jupiter is a key part of the larger Stargate AI infrastructure push. The site has faced regulatory hurdles, local pushback ahead of the midterm elections, and pressure from environmental groups.

Blue Owl Capital shares also fell on the news. Investors are worried about delayed AI capacity and financial strain tied to the project.

The Financial Times reported that $18 billion in debt linked to the data center is already trading at stressed levels. That’s a sign bond investors are pricing in extra risk.

Oracle pushed back on the concerns. The company told CNBC that Project Jupiter remains on schedule and that it is “fully committed to New Mexico.”

Co-CEO Clay Magouyrk also addressed the topic during the September 10 earnings call. He told analysts the data center would not hurt Oracle’s fiscal 2027 revenue or earnings guidance.

Bond Market Pressure Builds

The stock drop came alongside bigger moves in Oracle’s debt. Credit default swaps, contracts that protect investors if Oracle can’t repay its debt, hit a record high Wednesday.

The yield on Oracle’s 6.7% bonds due in 2056 climbed above 8% for the first time ever. Higher yields mean investors want more compensation to hold Oracle’s debt.

Oracle still carries an investment-grade credit rating for now. But ZeroHedge noted that roughly $120 billion of Oracle bonds could get pulled from investment-grade indexes if that rating slips to junk status.

Broader bond market trends aren’t helping. The 30-year Treasury yield moved above 5.4%, its highest level since 2004, and the 10-year yield climbed past 5.1%.

Rising government yields typically push up corporate borrowing costs too. That’s a problem for Oracle given how much capital it needs for its AI buildout.

Credit spreads have widened across other large tech companies as well. Reuters estimates hyperscaler debt issuance could hit $420 billion next year.

A Familiar Pattern for ORCL

This isn’t the first sharp move for Oracle stock lately. Shares are extremely volatile, with 37 moves greater than 5% over the past year.

Six days earlier, Oracle dropped 3.4% after Business Insider reported that Magouyrk told staff during an internal town hall that the company struggled to make generative AI useful internally. That’s despite spending billions building AI infrastructure for outside customers.

Chief Information Officer Jae Evans reportedly said Oracle faced sticker shock from the high cost of OpenAI’s GPT-6 Astra models. The report also pointed to software bottlenecks and high false-positive rates from Anthropic’s Mythos tool.

Oracle is now down 28.6% since the start of the year. At $139.59, the stock sits 55.4% below its 52-week high of $313, set in October 2025.

Despite the decline, a $1,000 investment in Oracle five years ago would be worth about $1,553 today.

Wall Street analysts remain largely bullish. The consensus rating is Strong Buy, based on 27 Buy ratings, four Holds, and one Sell over the past three months.

The average price target sits at $245.75, implying 76% upside from current levels.