NEW YORK: Oracle is seeking protection from potential cost increases linked to a major data center project in New Mexico by issuing a “force majeure” notice to the project’s developer, according to a Bloomberg News report cited by Reuters.
Oracle shares fell about 4% in morning trading following the report. Reuters said it could not independently verify the report.
The notice relates to Project Jupiter, a planned data center campus developed by a unit of Blue Owl. Oracle is the project’s main tenant.
According to the report, Oracle is seeking to delay payments if the project fails to meet its planned 2028 launch date. The move does not indicate that Oracle intends to withdraw as the project’s main tenant.
Companies typically use force majeure provisions to seek relief from contractual obligations when events beyond their control disrupt a project.
Project Faces Infrastructure Delays
Project Jupiter has faced several infrastructure challenges.
Media reports have cited delays to a planned natural gas pipeline and legal challenges involving water and air-quality permits.
Oracle’s reported move highlights the challenges facing the rapidly expanding AI infrastructure sector.
Technology companies and data center developers are racing to secure electricity, water and other resources needed to support growing AI workloads.
Any significant delay to Project Jupiter could raise concerns about the pace and cost of expanding computing capacity for AI services.
Oracle told Reuters that the project remains on schedule.
“Project Jupiter remains on our planned schedule,” the company said.
Oracle also said that, as part of its commitment to New Mexico, it was “reimagining” the project’s power plan.
Blue Owl, which owns data center developer Stack Infrastructure, said the notice did not change its financial commitments to the multi-year project.
However, it remains unclear whether Oracle’s reported move would ultimately free the company from its financial obligations.
Project Linked to Stargate
Project Jupiter forms part of Stargate, a major US AI infrastructure initiative involving OpenAI, SoftBank Group and other partners.
The initiative includes a $500 billion investment commitment to build AI infrastructure across the United States.
The New Mexico campus covers about 1,400 acres. Media reports have said the project secured $18 billion in loans from a consortium of banks.
The facility is also part of Oracle’s broader agreement with OpenAI to provide computing capacity for AI services.
The developments highlight the financial and infrastructure risks surrounding large-scale AI data center projects as companies seek to expand computing capacity to meet rising demand.
