Oracle Invokes Force Majeure as Power Delays Hit Its AI Data Center

Oracle has invoked a force majeure clause on a New Mexico data center campus meant to power its artificial-intelligence business, a person familiar with the matter told Reuters on September 24. The notice went to a unit of Blue Owl Capital, the developer of the project, and cited potential delays in securing power for the site.

The project, known as Project Jupiter, is part of the Stargate infrastructure effort intended to support OpenAI. It was designed to handle 2.45 gigawatts of computing capacity, and was scheduled to come online in 2028. The campus will run on gas-powered fuel cells supplied by Bloom Energy, which makes a reliable natural gas supply central to hitting the target date.

Companies invoke force majeure to free themselves from contractual obligations when problems arise beyond their control. The move is common in energy and infrastructure contracts, but it can raise concerns among lenders and investors when it appears on a project of this size.

Oracle shares fell 3.3 percent after the news. The notice has become a test case for lenders weighing the fast-growing market for AI infrastructure financing, according to the reports.

A payment delay, not a walkaway

Oracle is not trying to exit the project. Rather than ending its role as the main tenant, the company is seeking to delay payments if Project Jupiter fails to come online on schedule, according to Bloomberg News, which first reported the development.

The mechanics matter because of how the financing is structured. Alternative asset manager Blue Owl has about three billion dollars in equity in the project, while Oracle is responsible for paying the debt costs. Securing power for the site is Oracle's responsibility under the contract, and the company cannot terminate the lease under any circumstances, the person familiar with the matter told Reuters.

During the development stage, Blue Owl earns a nine percent yield on its equity. Once the project is complete, the levered yield is expected to be around 11 percent. By invoking force majeure, Oracle extends the period during which it pays Blue Owl the lower development-stage rent. Blue Owl would still receive the higher rent for the originally planned duration, but its start would be pushed back.

Oracle has pushed back against any suggestion that the schedule is slipping. The company said Project Jupiter "remains on" its planned schedule, and said it was "fully committed" to New Mexico and "confident in" its path forward, in a statement to CNBC. Blue Owl, which owns the data center developer Stack Infrastructure, said the notice does not change the financial commitments to this multi-year project.

Why power is the hard part

The force majeure notice follows a series of setbacks tied to the campus's power infrastructure. An Energy Transfer pipeline intended to deliver natural gas to the site has been delayed nearly six months, with its completion pushed to February 1, 2027. Regulators repeatedly denied permits for the line, forcing a route change that was reported in August.

A separate air-quality permit for the fuel cell system is still pending. New Mexico's environment department faces a November 23 deadline to decide on it.

The delay is expected to run about one year, according to reporting on the deal. That pushes back the higher returns on Blue Owl's equity stake and gives lenders a live look at who bears the risk when the grid cannot keep up with data center construction.

The episode points to a structural problem in the AI boom. Dense computing racks need power conversion, cooling, and switchgear, and grid constraints are pushing data center operators toward on-site generation. When the utilities and pipelines cannot deliver, the financing agreements have to absorb the gap. In this case, the clause that absorbs it is force majeure.

"The financing side of the AI buildout is starting to ask much harder questions than the demand side," said Sean McDevitt, a partner at management consulting firm Arthur D. Little. The underlying demand still appears strong, but investors and lenders are increasingly focused on how risk is allocated, he added.

For Oracle, the stakes go beyond one campus. The company has spent the past year positioning its cloud business as a home for AI workloads, naming new co-chief executives in September 2025 and committing to tens of billions of dollars in infrastructure spending. Jupiter is where that strategy meets physical ground: a cloud business can sell AI computing only if developers can deliver a powered facility on schedule.

Read more: Reuters: Oracle triggers force majeure on data center project over power delays and Oracle-Blue Owl project delay puts spotlight on AI financing.