Oracle Corp. has sent a notice of force majeure to the developer of Project Jupiter, a data center campus that’s currently under construction in New Mexico, according to a report by Bloomberg.
Force majeure is a kind of clause that’s often inserted into contracts in the energy and commodities industries that excuses one of the parties from fulfilling its obligations due to events outside of its control. What this means is that Oracle isn’t trying to back away from the deal it has signed to become the facility’s main tenant, but rather, delay payments that are scheduled to be made, if it doesn’t come online by its slated 2028 target date.
Though the notice is designed to protect Oracle, it doesn’t look good to outside observers. The cloud infrastructure giant’s stock fell more than 3% during regular trading in the hours following the report. It betrays the growing nervousness of investors about Oracle’s vast spending on artificial intelligence infrastructure. Like Google LLC, Microsoft Corp. and Amazon Web Services Inc., Oracle has been spending massive amounts of money to build the data centers it needs to meet the demands of its customers, but there are concerns about when it will actually see a return on its investments.
In its most recent earnings report earlier this month, Oracle said it spent $28.5 billion on capital expenditures during its fiscal first quarter, up from $8.5 billion in the same period one year earlier. The company also reported a negative free cash flow of $5 billion in the quarter.
KeyBanc analyst Jackson Ader told Barron’s that investors are concerned the notice could mean that Oracle has to wait longer to recognize some of the billions of dollars in its revenue backlog. “Oracle is in the most tenuous of cash positions of all the major hyperscalers,” he pointed out. “These types of issues might spread, but Oracle feels it more acutely than its larger, more cash rich peers.”
Oracle insisted that it doesn’t expect any significant delays at the New Mexico site. “Project Jupiter remains on our planned schedule,” the company said in a statement to CNBC. “We are fully committed to New Mexico and confident in our path forward.” Blue Owl Capital LLC, whose subsidiary is responsible for the construction of the facility and received the notice, told Bloomberg that “this notice does not change the financial commitments to this multi-year project.”
While both parties continue to express confidence publicly, their statements cannot hide the reality that the site has been hit by a number of setbacks that may ultimately delay the project’s completion. The campus is expected to generate 2.45 gigawatts of computing power when it comes online. It’s set to run on gas-powered fuel cells supplied by a company called Bloom Energy Inc., and that means the site also requires a reliable gas supply.
But that plan has experienced hiccups. According to Bloomberg, an energy transfer pipeline that’s intended to pipe gas to the facility was meant to come online earlier this summer, but has been delayed until February next year after it failed to receive the necessary permits from regulators. The developer has reportedly proposed a different route for the gas pipeline following that rejection.
Meanwhile, the facility is also awaiting a separate air-quality permit for its fuel-cell power system. New Mexico’s environmental department is due to decide on that issue before a Nov. 23 deadline.
The project is one of the flagship sites of Oracle’s, SoftBank Group Corp.’s and OpenAI Group PBC’s much-vaunted $5 billion Project Stargate initiative, which was announced in January 2025 at the White House, shortly after President Donald Trump began his second term in office. However, New Mexico residents have strongly opposed the project, drawing support from environmental groups, and it has since become a major political issue ahead of the midterm elections.
In response, Oracle has launched a major public outreach campaign in New Mexico aimed at winning over critics of the project, Bloomberg said.