Oracle's 'force majeure' notice raises questions about the company's ability to deliver on AI data centers

Oracle’s move to protect itself against a potential delay for its flagship AI data center project has Wall Street questioning whether the company can deliver the capacity needed to support its AI business.

Oracle sent a force majeure notice to Stack Infrastructure, the Blue Owl Capital-owned developer of Project Jupiter, a planned AI data center in New Mexico.

Such notices can allow companies to suspend some contractual obligations when events outside their control disrupt a project.

Bloomberg earlier reported on the notice.

Oracle said the project remains on schedule. “Force-majeure notices are commonplace in developments of this scale and are often used to preserve contractual rights among project partners,” Michael Egbert, an Oracle spokesperson, said. “They do not, by themselves, establish a project delay or change delivery expectations.” “Blue Owl, STACK Infrastructure and Oracle remain fully aligned on Project Jupiter,” the spokesperson said. “This notice does not change the financial commitments to this multiyear project.” Oracle shares were down about 4% on Thursday afternoon amid investor questions about the company’s ability to deliver on its massive AI infrastructure expansion.

The notice “signals the company’s own risk assessment on execution has shifted enough to warrant legal cover,” RBC Capital Markets analyst Rishi Jaluria wrote in a note to investors, meaning Oracle believes the risk of delay has increased.

Oracle has borrowed tens of billions of dollars to finance new data centers as it races to meet what it says is surging demand for AI computing.

That strategy depends not only on signing customers but also on bringing enough new capacity online to convert its growing backlog of contracts into revenue.Business Insider previously reported that some banks and institutional investors were growing wary of taking on too much exposure to Oracle, as lenders sought to distribute debt tied to its Stargate data centers.

Oracle reported $28.5 billion in first-quarter capital expenditures, up from $8.5 billion a year earlier, and maintained its fiscal 2027 capital expenditure forecast at $90 billion to $95 billion.

Project Jupiter is one of the facilities that Oracle is counting on to turn that backlog into revenue, Jaluria wrote. “Any slippage in the 2028 timeline has direct implications for capacity delivery and revenue recognition given Oracle’s supply-constrained posture,” he wrote.

Evercore called the reported notice “a pretty sensible move” to align Oracle’s revenue and expenses if the project is delayed and said it “is not an indication that this project is going away.” William Blair likewise said the immediate financial impact should be limited because Project Jupiter is not expected to contribute revenue in Oracle’s current fiscal year, though it said investors will remain focused on whether delays to AI data centers push back future cloud revenue.

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