Sept 24 (Reuters) – Oracle is seeking to protect itself from potential cost increases related to a large data center project in New Mexico by sending a “force majeure” notice to the project’s developer, a unit of Blue Owl, Bloomberg News reported on Thursday.
Shares of the company fell around 5% in trading after the report, which cited sources familiar with the matter. Reuters could not independently verify the news.
Rather than exiting as the main tenant, Oracle is attempting to delay payments should the data center dubbed Project Jupiter get derailed and fail to come online in 2028 as planned, according to the report.
Companies typically invoke force majeure to free themselves from contractual obligations when problems arise beyond their control, a move that can raise concerns among lenders and investors.
“Project Jupiter remains on our planned schedule,” Oracle said in response to a Reuters inquiry.
“Force-majeure notices are commonplace in developments of this scale and are often used to preserve contractual rights among project partners. They do not, by themselves, establish a project delay or change delivery expectations,” Oracle added.
Alternative asset manager Blue Owl, which owns the data-center developer Stack Infrastructure, said the notice does not change the financial commitments to this multi-year project.
The 1,400-acre Project Jupiter campus, which secured $18 billion in loans from a consortium of banks, according to media reports, is part of Oracle’s broader agreement with OpenAI to provide AI computing capacity.
The New Mexico data center campus has reportedly faced multiple infrastructure setbacks, including delays to a planned natural-gas pipeline and legal challenges over water and air-quality permits.
The project is a part of Stargate, an initiative to build AI infrastructure in the US under a $500 billion investment commitment involving OpenAI, SoftBank Group and partners including Oracle.
The massive AI infrastructure build-out has faced mounting challenges, as developers race to secure power, water and other resources while managing the massive costs of deploying computing capacity for partners such as OpenAI.
Growing opposition from the public has made data centers a political flashpoint, with communities around data center projects raising concerns over their impact on local supply of energy, water and other natural resources.
Brokerage William Blair said while this news intensifies worries about regulatory and power-related delays affecting AI deployments, it expects minimal short-term impact on Oracle.
“Practically, fiscal 2027 should not be affected, since Jupiter contributes no revenue this year.”
(Reporting by Jaspreet Singh and additional reporting by Prakhar Srivastava in Bengaluru; Editing by Devika Syamnath and Anil D’Silva)
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