Morgan Stanley Warns Oracle Power Delays Risk Debt Default

Morgan Stanley analysts warn that power delivery delays at AI data center campuses could severely impact the debt stability and cash flow of Oracle. The Project Lighthouse campus in Port Washington, Wisconsin, faces a material risk of lacking meaningful power load until mid-2028 due to regulatory hurdles involving the Public Service Commission of Wisconsin and ATC transmission lines. This timeline contradicts previous company guidance of a second-half 2027 delivery.

Similar bottlenecks affect the Project Jupiter site in New Mexico, where Oracle is considering hauling compressed natural gas by truck at four times the pipeline cost to maintain progress. Morgan Stanley argues these delays do not provide capital expenditure relief but instead defer revenue and compress future infrastructure spending and lease liabilities into a shorter window.

These delays create significant refinancing risk for the Abilene site, which has $9.4 billion in construction loans due in 2028. As a result, Oracle's credit default swaps reached a record 261bps, implying a more than 20% probability of default over five years. Morgan Stanley credit analyst Lindsay Tyler noted that such a delay means "delayed monetization and delayed proof of concept, delayed revenue, delayed cash flow."