Oracle Financial Services Software (OFSS) shares fell more than 6% in early trade on Monday, September 21, making it one of the biggest losers in the IT pack even as HCL Technologies, TCS and Tech Mahindra traded higher.
OFSS declined 6.41% in early trade, while Wipro, Infosys, Coforge and Mphasis also remained under pressure. The sharp fall in OFSS came after reports put the spotlight on financial stress surrounding parent Oracle Corp's AI infrastructure expansion.
The immediate trigger is concern around about $18 billion of loans tied to Oracle's Project Jupiter data-centre campus in New Mexico, according to a Financial Times report. The loans were quoted at around 89-91 cents on the dollar, below face value, while efforts to distribute the debt to a wider pool of investors have reportedly stalled.
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The 1,400-acre Project Jupiter campus is part of Oracle's broader agreement with OpenAI to supply AI computing capacity. Funding for the project was arranged through a consortium of banks late last year. Rising borrowing at Oracle and a weaker credit profile have increased scrutiny around the financing, with S&P having downgraded Oracle's credit rating in July to one notch above junk.
Project-related concerns are adding to the pressure. Local opposition has focused on the proposed infrastructure's potential impact on water supply and air quality. Oracle has disputed the extent of those concerns, saying the data-centre construction and its separate microgrid permitting process are distinct, with construction continuing under existing county permits.
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