- Oracle’s force majeure notice over its New Mexico Project Jupiter data center is putting new focus on power delays, financing risks, and the cost of the company’s aggressive AI infrastructure expansion.
Oracle Corp. (NYSE: ORCL) has issued a force majeure notice tied to its massive Project Jupiter data center in New Mexico, giving the company contractual protection if the facility fails to meet its planned 2028 launch date.
The notice was sent to Stack Infrastructure, a unit of Blue Owl Capital Inc. (NYSE: OWL) developing the 1,400-acre campus, according to Reuters and other reports. Oracle is not seeking to walk away from the project. Instead, the notice could allow it to delay certain payments if construction and power-related problems prevent the facility from becoming operational as planned.
Oracle, however, said Project Jupiter remains on schedule and that it remains committed to New Mexico. Blue Owl likewise said the notice does not change the financial commitments attached to the multiyear project.
The conflicting signals matter because Project Jupiter is one of the major facilities supporting Oracle’s broader agreement to provide AI computing capacity to OpenAI.
Why Oracle's New Mexico Data Center Is Facing Delays
The immediate problem is power. Reuters reported that Oracle invoked force majeure because of delays in securing power for the site. A person familiar with the matter told Reuters that the project is being delayed by about a year, although Oracle has not publicly confirmed that timeline.
The project has already encountered several infrastructure and permitting obstacles. A planned natural-gas pipeline needed to supply the site's power system has faced regulatory setbacks, while the facility has also drawn opposition related to water use and air quality. The campus is designed for roughly 2.45 gigawatts of capacity and is expected to use fuel cells supplied by Bloom Energy.
The Wall Street Journal reported that Project Jupiter has become an example of the challenges facing Oracle's broader AI infrastructure push, citing problems involving power, permitting and local resistance.
The financing backdrop has also become more complicated. Last week, roughly $18 billion of loans tied to Project Jupiter were trading at 89 to 91 cents on the dollar, below par, amid concerns over the project and Oracle's rising borrowing requirements.
What the Oracle Data Center Delay Means for AI Financing
Project Jupiter is becoming a closely watched test for how the AI infrastructure boom is financed. Reuters reported Thursday that bankers and investors are examining the Oracle situation as lenders become more cautious about the enormous amount of capital required to build data centers. The report said the issue is extending beyond Oracle, with financing discussions around other AI data center projects also being affected.
Oracle spent $28.5 billion on capital expenditures in its fiscal first quarter, up from $8.5 billion a year earlier, primarily because of data center expansion. The company has forecast fiscal 2027 capital expenditures of roughly $90 billion to $95 billion.
At the same time, Oracle's AI business continues to generate strong demand. The company reported $19.3 billion in quarterly revenue in its latest results, while remaining performance obligations reached $664 billion, driven in part by large cloud contracts.
That creates the central question for investors: whether the industry's demand for AI computing can translate into data center capacity quickly enough to justify the enormous financing and construction commitments now being made.