• Oracle reportedly sends force majeure notice to developer of its Project Jupiter AI data center in New Mexico.
  • The move seeks protection from added costs and allows deferral of payments if the project misses its planned 2028 opening.
  • Oracle shares fell as much as 5.1% in early trading on concerns over financing and execution risks.

Oracle's Force Majeure Notice on Project Jupiter

Oracle Corp. has reportedly issued a force majeure notice to the developer of its massive New Mexico AI data-center project, Project Jupiter, signaling potential delays and cost overruns that could complicate the company's aggressive cloud infrastructure buildout. The notice, sent to an affiliate of Blue Owl Capital (OWL), is aimed at shielding Oracle from additional costs and allowing it to defer payments if the project fails to meet its scheduled 2028 opening, according to people familiar with the matter. The report, which Reuters (TRI) could not independently verify, sent Oracle shares down 5.1% in early trading.

The force majeure notice does not mean Oracle is abandoning the project. Rather, it is a contractual safeguard as the company faces mounting execution risks. Project Jupiter, a hyperscale AI-data-center campus in Santa Teresa, Doña Ana County, has encountered hurdles including power supply constraints, permitting delays, water rights disputes, and local opposition. The project is also tied to OpenAI's broader Stargate infrastructure initiative, underscoring its strategic importance.

A key concern is the delayed Green Chile gas-pipeline project, which is intended to fuel the campus. In August, its completion date was pushed from August 2026 to February 2027, though Oracle maintained at the time that Project Jupiter remained on schedule. The New Mexico Supreme Court recently lifted temporary stays on air-permit and water-well processes, allowing proceedings to resume, but environmental groups have vowed to continue their legal challenges.

Oracle's financials highlight why any delay is significant. The company reported $67.4 billion in FY 2026 revenue, up 17% year over year, with cloud revenue surging 39% to $34.0 billion. Its remaining performance obligations—a measure of contracted backlog—soared 363% to $638 billion, much of it from large-scale AI contracts. However, free cash flow was negative $23.7 billion, reflecting the capital intensity of its expansion. Oracle has already raised $43 billion in debt and $5 billion in equity in FY 2026 and plans to raise another $40 billion in FY 2027, including a $20 billion at-the-market equity program.

"Institutional investors like us are really focused on regulatory stability," said Andrea Valeri, Blackstone (BX)'s country chairman for Italy, at a recent conference. While Valeri was speaking about Italy, his comment resonates with Oracle's situation: regulatory and execution uncertainties can weigh heavily on investor sentiment.

The project's developer projects thousands of construction jobs, up to 1,500 ongoing roles, and an annual economic impact of $384 million during construction. But critics argue that the 2.45-gigawatt microgrid, powered by Bloom Energy (BE) fuel cells using natural gas, still relies on fossil fuels and could strain local water resources. Oracle says the redesigned facility will not use community drinking water for cooling, relying instead on non-potable water for startup and maintenance.

The force majeure notice could intensify negotiations over schedule, payment timing, and risk allocation. For Oracle, the stakes are high: the company needs to convert its massive backlog into revenue, and Project Jupiter is a cornerstone of that effort. Any material delay could also affect the availability of AI computing capacity for customers, though no report currently suggests contracted capacity will fail to be delivered.

Investors will be watching for further details on whether the notice is a routine contractual move or a sign of deeper problems. Oracle declined to comment. Blue Owl Capital did not immediately respond to a request for comment.

Correction: An earlier version of this article misstated the percentage decline in Oracle shares. It fell as much as 5.1%, not 5.1% exactly.