Oracle Invokes Force Majeure on New Mexico AI Data Center to Seek Protection from Higher Costs

Oracle invoked force majeure on its New Mexico AI data center project, known as Project Jupiter, sending a notice to developer Blue Owl Capital. This legal move allows Oracle to delay payments if the facility does not come online as scheduled in 2028. Following the announcement, Oracle stock fell 4%.

Financial Strain and Capital Expenditures

The decision highlights the intense financial pressure Oracle faces in its AI infrastructure buildout. Recent regulatory filings reveal:

• Capital Expenditures: Cash used for capex surged to $28.5 billion in the quarter ended August 31, up from $8.5 billion a year earlier.
• Free Cash Flow: The company reported negative free cash flow of $5.4 billion for the same quarter.
• Debt and Equity: Oracle plans to raise approximately $40 billion through debt and equity in its current fiscal year.
• Restructuring Costs: The estimated cost of planned job cuts increased by $700 million, bringing the total 2026 Restructuring Plan cost to roughly $2.8 billion.

Project Jupiter and Stargate Context

Project Jupiter is part of the broader Stargate AI infrastructure initiative. The project has faced significant obstacles, including community pushback and environmental objections ahead of midterm elections. Reports indicate growing anxiety over $18 billion in debt tied to the data center, which is already trading at stressed levels.

Company Responses

Oracle stated that Project Jupiter remains on schedule and affirmed its commitment to the New Mexico site. Blue Owl Capital disputed the notion that the force majeure notice would alter the project's financial commitments, maintaining that the multi-year project's finances remain unchanged.