Oracle issues ‘force majeure’ notice to developer of New Mexico data center over energy delays

Oracle, the cloud infrastructure leader, has informed the developer of Project Jupiter, a data center being constructed in New Mexico, of a force majeure notice. This notice allows Oracle to postpone payments scheduled for the facility if it fails to become operational by its targeted 2028 completion date. Oracle's stock dipped over 3% following the report, reflecting investor concerns about the company's significant investments in AI infrastructure.

Bloomberg's report reveals that Oracle spent $28.5 billion on capital expenditures in its latest fiscal quarter, up from $8.5 billion a year prior, but reported a negative free cash flow of $5 billion. The force majeure clause is commonly used in energy and commodities contracts to excuse non-performance due to uncontrollable events.

Oracle maintains it doesn't foresee any major delays at the New Mexico site, but acknowledges ongoing setbacks. These include delays in gas pipeline permits and an awaiting environmental air-quality permit. The project, part of Oracle's $5 billion Project Stargate initiative, has faced opposition from New Mexico residents, turning it into a political issue before upcoming midterm elections. Oracle is actively engaging with critics to address concerns.