Stifel has reiterated its "Buy" rating on Oracle, with attention centered on the latest advancements at the company's Project Jupiter data center initiative in New Mexico. Although the venture continues to face certain permitting and infrastructure hurdles, the recent resolution of two legal disputes has cleared away some of the obstacles blocking further construction progress.
According to Mahesh Thiagarajan, Vice President of Cloud Infrastructure at Oracle, the overall construction completion for Project Jupiter has reached 26% as of last weekend, marking a 17-percentage-point improvement from the figures disclosed in July. Despite this progress, several critical bottlenecks remain. The fuel cell microgrid component is currently only about 10% complete, air quality and water-related permits are still in the approval process, and the authorization for a natural gas pipeline has not yet been fully secured. These lingering factors could still influence the pace of subsequent construction.
Recently, the New Mexico Supreme Court issued two rulings that have lifted some of the legal impediments surrounding the project. The court unanimously rejected a petition from New Energy Economy that sought to cancel the air quality permit hearing, and it also dismissed a challenge brought by the Center for Biological Diversity concerning the project's emergency water withdrawal permit. As a result, the air quality permit hearing for Project Jupiter can now move forward, and the project developer is permitted to resume water extraction from a well in Santa Teresa, which had been suspended for more than three weeks.
Stifel noted that the air quality permit hearing still lacks an assigned reviewer and a confirmed date, so the approval process has not entirely concluded. However, the two major legal uncertainties weighing on the project have now been alleviated. The advancement of Project Jupiter is part of Oracle's broader push to expand its AI and cloud infrastructure footprint. In the company's most recent fiscal quarter, the cloud infrastructure segment sustained rapid growth, with revenue in this division climbing approximately 120% year-over-year on a constant currency basis, underscoring that demand for AI computing power continues to fuel business expansion.
On the whole, Stifel maintains that although Oracle's large-scale data center buildout still carries elevated capital expenditure, permitting, and margin pressures, the improved construction progress at Project Jupiter, coupled with fewer legal obstacles and the fast-growing cloud infrastructure revenue, continues to support the firm's "Buy" recommendation.