Oracle is seeking to protect itself from potential cost increases related to a large data center project in New Mexico by sending a “force majeure” notice to the project’s developer, a unit of Blue Owl according to a Bloomberg report.
“Project Jupiter remains on our planned schedule,” Oracle said in a statement to CNBC. “We are fully committed to New Mexico and confident in our path forward.”
According to the report, the company is looking to delay payment on the campus if it fails to come online as expected in 2028. “This notice does not change the financial commitments to this multi-year project,” Blue Owl Capital said in a statement to CNBC.
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The New Mexico data center is part of the broader Stargate artificial intelligence infrastructure build-out. However, it has faced several hurdles, including local opposition to data centers ahead of the upcoming midterm elections.
Companies typically invoke force majeure to free themselves from contractual obligations when problems arise beyond their control, a move that can raise concerns among lenders and investors.
“Force-majeure notices are commonplace in developments of this scale and are often used to preserve contractual rights among project partners. They do not, by themselves, establish a project delay or change delivery expectations,” Oracle added.
According to media reports, the 1,400-acre Project Jupiter campus, which secured $18 billion in loans from a consortium of banks is part of Oracle’s broader agreement with OpenAI to provide AI computing capacity.
Oracle co-CEO Clay Magouyrk told analysts on the company’s earnings call on Sept. 10 that Project Jupiter would not affect its previously stated fiscal 2027 revenue or earnings guidance.
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There have also been mounting concerns about Oracle’s $18 billion in debt tied to the data center, which is already trading at stressed levels, according to the Financial Times.
Data centers have been of late facing increasing opposition, and has become a political flash point. Communities around data centers have raised concerns over their impact on local supply of energy, water and other natural resources.
Brokerage William Blair said while this news intensifies worries about regulatory and power-related delays affecting AI deployments, it expects minimal short-term impact on Oracle.
“Practically, fiscal 2027 should not be affected, since Jupiter contributes no revenue this year,” he said.
Oracle shares fell 4% on Thursday after news about the force majeure came out.