Oracle Stock Dives as Project Jupiter Hits Snags
Oracle shares ORCL took a 5% hit on Thursday after the company sent a force majeure notice related to Project Jupiter, an AI data center campus in New Mexico. The facility is being built by Blue Owl Capital and will house Oracle's main tenant. According to Bloomberg, Oracle wants to delay payments if construction setbacks prevent the facility from coming online as planned in 2028.
The force majeure provision protects companies from contractual obligations when events outside their control hinder a project's progress. Project Jupiter has faced several setbacks, including regulatory challenges surrounding its energy supply. A natural gas pipeline intended for the facility was delayed by nearly six months due to repeated permit denials.
Despite these developments, Oracle maintains that Project Jupiter remains on schedule and committed to New Mexico. Blue Owl also stated that the force majeure notice does not alter the project's financial commitments. However, the financing behind Project Jupiter has come under scrutiny, with around 20 banks providing an $18 billion loan for construction.
The debt tied to the project is trading below 90 cents on the dollar, indicating pressure on the loans. A potential delay could have implications beyond Oracle's payments, affecting the development and its financing. Project Jupiter is part of a broader wave of debt deals used to fund AI infrastructure expansion.