Oracle has issued a force majeure notice related to its Project Jupiter data center in New Mexico, which is being developed by Blue Owl unit STACK Infrastructure to support OpenAI. This action is intended to protect Oracle from potential delays and associated costs, particularly concerning securing power to the site, which could postpone the project by about a year. The notice has raised concerns among the lenders who provided an $18 billion loan for the project, as the debt is already trading at stressed levels below 90 cents on the dollar. Oracle's stock fell by 3.5% and Blue Owl's by 3.6% following the news.
The force majeure move by Oracle is sending ripples through the AI infrastructure financing market, making lenders and investors more cautious. Analysts note that the financing side of the AI buildout is beginning to ask tougher questions about risk allocation, especially with rising interest rates. This is evident as discussions for other data center financings, such as SB Energy's Ohio campus for OpenAI, are being affected, leading SB Energy to delay its IPO. Companies are increasingly using force majeure clauses in data center development agreements, a trend causing apprehension among financial institutions.
The broader context is the significant capital expenditure in AI, with Moody's projecting that the six largest US technology companies will spend approximately $1 trillion on AI-related infrastructure by 2027. This high volume of spending is leading to concerns among lenders about potential pricing pressure and tighter terms in the market. The Oracle situation serves as a real-world case study for investors and lenders to understand how contractual protections are tested and who bears the costs when large-scale projects face unforeseen delays.
