Oracle Corp. recently issued a force majeure notice to Blue Owl Capital Inc., the developer of its massive New Mexico data center, dubbed "Project Jupiter." While Oracle stated this is a precautionary measure to preserve contractual rights and doesn't indicate a delay or change in delivery expectations, analysts and investors are scrutinizing the move closely. This notice is seen as a signal of increased risk regarding the project's execution and has raised questions about Oracle's ability to meet its AI infrastructure expansion goals.
The project is facing potential delays due to issues securing power, specifically a natural-gas pipeline whose completion has been pushed back to February 1, 2027. This delay could grant Oracle a three-year deferral on rent payments once they commence, although Oracle would still be responsible for other interim costs and the full lease term. The "Project Jupiter" data center, which could cost up to $165 billion in total, has already secured an $18 billion loan from a consortium of approximately 20 banks, and this debt is reportedly trading below 90 cents on the dollar, reflecting investor concern.
Oracle's stock fell between 3.5% and 6.4% on Thursday following the news, with its year-to-date slide reaching up to 31%. Blue Owl's shares also saw a decline of 3.6% to 3.7%. This event has sent ripples through the AI infrastructure financing market, making lenders and investors more cautious about similar mega-debt deals. Analysts like Rishi Jaluria of RBC Capital Markets believe the notice indicates Oracle's own risk assessment has shifted, increasing the likelihood of delays despite official statements to the contrary.
