Oracle’s AI expansion runs into a power supply problem

what happened

Oracle Corp. (ORCL, Financials) is finding that the main obstacle to its AI expansion may be securing electricity for new data centers on time rather than winning customer demand, GuruFocus reports. At a location near Salt Lake City, natural gas was delivered by truck for more than a year as a pipeline was completed. Oracle is now deploying or testing similar temporary gas-supply arrangements at three other sites.

The timing mismatch is central to the problem: customer contracts set delivery deadlines, while pipelines, utility connections and permits can take far longer. GuruFocus’ analysis found that trucked natural gas may cost four times more than pipeline deliveries. Pipeline-related issues have delayed the schedule for Oracle’s 2.45-gigawatt campus at Project Jupiter in New Mexico.

Oracle is assessing its options, making execution a key part of the company’s AI story for investors. The company has substantial signed demand, but building capacity quickly may require expensive workarounds and continued capital spending. That challenge is particularly significant because Oracle is already generating negative free cash flow while growing rapidly.

why it matters

The company’s AI economics depend not only on signed contracts but also on timely access to power. Delays and temporary energy infrastructure could increase the cost of fulfilling those agreements.

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