Cracks in Oracle’s AI Data-Center Build-Out Appear in Massive New Mexico Project

Oracle has informed the developer of a major New Mexico data center project, Blue Owl Capital, through a force majeure notice, seeking to delay payments if construction setbacks prevent the facility from opening as scheduled in 2028. This move is aimed at protecting Oracle from incurring costs on the Project Jupiter campus, which is a crucial part of the Stargate AI initiative that Oracle, OpenAI, and SoftBank announced.

The 2.45 gigawatt facility is not being abandoned by Oracle, as it remains the main tenant. Instead, the notice seeks to defer rent payments should construction delays occur. If both parties agree such a force majeure event has happened, Oracle may secure a three-year rent delay once payments are due. Oracle would still be responsible for interim costs and the full lease term post-delivery.

The company stated that force-majeure notices in large-scale projects are common and do not automatically alter delivery expectations. Blue Owl added that the notice does not change their financial commitments and that both parties remain fully aligned on the project. Project Jupiter has encountered several regulatory and energy setbacks, including a delayed natural gas pipeline supply and opposition to AI data center expansion.

Oracle's stock fell by 4.4 percent, and Blue Owl's shares dropped 3.7 percent, reflecting concerns in the market. The project's debt is trading below 90 cents on the dollar, indicating investor worry. The $18 billion construction loan, provided by about 20 banks, has not been impacted by the force majeure notice.