Oracle shares fall as Project Jupiter force majeure notice raises AI data-centre risk

Oracle Corporation (NYSE: ORCL) is attempting to protect itself against potential costs if its planned Project Jupiter artificial-intelligence data centre in New Mexico is delayed or fails to become operational in 2028, according to exclusive reporting by Bloomberg News. Bloomberg reported, citing people familiar with the private contractual matter, that Oracle sent a notice invoking force majeure to the project’s developer, a unit ultimately owned by Blue Owl Capital Inc. Oracle is not seeking to abandon the site as its principal tenant, according to the report, but is attempting to preserve its contractual position if delays prevent the campus from opening as scheduled.

Oracle shares fell around 4% in morning trading following the report, according to Reuters, while other market data showed the decline becoming still steeper at points during Thursday’s session. The reaction reflects mounting investor sensitivity to the capital intensity of Oracle’s artificial-intelligence expansion, particularly after Project Jupiter became associated with approximately $18 billion of debt and repeated questions about energy infrastructure, environmental permitting and construction timelines. Reuters said it could not independently verify Bloomberg’s private-source reporting about the force majeure notice.

What does Oracle’s Project Jupiter force majeure notice actually mean?

Force majeure provisions generally address circumstances beyond a contracting party’s reasonable control that prevent or delay fulfilment of contractual obligations. Bloomberg reported that Oracle is attempting to ensure it does not accumulate payments if Project Jupiter is derailed or substantially delayed, although whether the contractual step would ultimately relieve Oracle of particular obligations remains uncertain. The reported notice therefore should not be interpreted as confirmation that Oracle has cancelled the New Mexico development or intends to exit the project.

Oracle said in response to Reuters that Project Jupiter remains on its planned schedule and that the company remains fully committed to New Mexico. Blue Owl Capital, whose portfolio company Stack Infrastructure is developing the site, separately said the notice does not change the financial commitments associated with the multi-year development. Those responses materially narrow the meaning of the reported force majeure action: the immediate issue is contractual protection against potential future disruption rather than an announced termination of construction.

The distinction is particularly important because Project Jupiter is one of the physical infrastructure projects supporting the broader Stargate artificial-intelligence buildout involving OpenAI, SoftBank Group Corp., Oracle and other partners. The campus is being designed on a scale rarely seen in conventional corporate information technology, which means seemingly local questions involving pipelines, air permits or water infrastructure can eventually affect billions of dollars of financing and AI computing capacity.

Why has Oracle’s New Mexico AI data centre become so controversial?

Project Jupiter covers approximately 1,400 acres in Doña Ana County and has become one of the most closely watched data-centre developments in the United States. Oracle has said the project could generate more than $4.7 billion in long-term economic impact for New Mexico and Doña Ana County through investment, taxes and associated commercial activity, while creating more than 7,000 construction jobs and around 1,500 ongoing project-supported positions once operational. The company said in July that the project had already generated nearly $80 million in state and county tax revenue.

The infrastructure required to power the campus has proved more complicated. Oracle initially supported a power configuration based on natural-gas turbines and diesel generators but later redesigned the system around Bloom Energy fuel cells, with as much as 2.45 gigawatts of installed fuel-cell capacity proposed. Oracle says the redesign should reduce water consumption and emissions compared with the earlier combustion-based configuration while allowing the company to pay directly for the project’s energy requirements.

Local and regulatory disputes have nevertheless continued. Bloomberg reported that a natural-gas pipeline intended to help supply the development was delayed following repeated permit denials for its proposed route, while Project Jupiter has faced scrutiny around water use, air quality and the broader environmental consequences of placing hyperscale computing infrastructure in southern New Mexico. Oracle has separately stressed that the data-centre buildings and the proposed microgrid are legally distinct facilities and that a court stay affecting an air-permit proceeding does not halt construction of the data-centre structures themselves.

How large is the financial exposure tied to Project Jupiter’s AI expansion?

The financial structure illustrates how dramatically the AI infrastructure boom is changing corporate borrowing. Project Jupiter has reportedly secured approximately $18 billion of loans from a bank consortium, while the Financial Times reported earlier in September that some of the debt had begun trading below face value as investors reassessed execution risk, Oracle’s broader leverage and uncertainty around the New Mexico project. Reuters attributed those debt-market details to the Financial Times and said Oracle, Santander and Jefferies declined to comment on the report.

That matters because Oracle is expanding artificial-intelligence infrastructure faster than its historical software business required. Cloud contracts can generate enormous future revenue, but data centres require capital upfront for buildings, processors, networking, power systems and supporting infrastructure. Delays therefore create a potentially painful mismatch between financing costs that begin immediately and customer capacity that cannot generate revenue until it becomes operational.

Oracle’s New Mexico commitment extends beyond one energy configuration. The company announced in September that it was seeking proposals for two gigawatts of new renewable electricity generation in the state, including solar, wind and geothermal projects capable of coming online between 2027 and 2031. Oracle says it wants Project Jupiter to achieve 100% carbon-free energy matching by 2031, adding another major infrastructure programme alongside the data centre itself.

Why are investors becoming more sensitive to Oracle’s AI infrastructure spending?

Artificial-intelligence enthusiasm initially encouraged investors to reward technology companies for securing as much future computing capacity as possible. That sentiment is becoming more complicated as enormous capital requirements appear on corporate balance sheets and credit markets begin asking how quickly data-centre investments can generate returns.

Project Jupiter provides a clear example. Oracle is seeking to become one of the major infrastructure suppliers behind OpenAI and other AI customers, potentially creating long-duration cloud revenue. Yet the company must simultaneously manage construction execution, financing, regulatory approvals, environmental opposition and energy supply at a physical scale far removed from its traditional database-software operations.

The September 24 share-price decline suggests that investors are assigning increasing value to execution certainty. A reported contractual safeguard that might have attracted little attention during the early AI boom now matters because lenders and shareholders are scrutinizing the possibility that large infrastructure projects arrive later or cost more than initially assumed.

What would determine whether Project Jupiter remains on track for 2028?

Power infrastructure is likely to remain one of the most important variables. The project needs enormous and reliable electricity supply, while Oracle’s switch toward Bloom Energy fuel cells and its renewable-energy procurement effort must proceed alongside construction of the computing campus itself. Permitting decisions, pipeline infrastructure and implementation of the microgrid will therefore be closely watched over the coming quarters.

Financing conditions matter almost as much. If creditors become more cautious toward AI-linked infrastructure debt, Oracle and its partners could face higher borrowing costs even if physical construction continues. Conversely, visible progress, confirmed power arrangements and clearer operating timelines could reduce the risk premium currently surrounding the development.

Oracle continues to state that Project Jupiter is proceeding according to plan. The reported force majeure notice does not contradict that statement by itself, but it demonstrates how carefully Oracle is preparing for the financial consequences if one of the most ambitious AI data-centre projects in the United States does not develop exactly as scheduled.