Oracle sends force majeure notice on Project Jupiter data center, sparking AI debt concerns

Oracle's Project Jupiter Notice

Oracle issued a force majeure notice to Stack Infrastructure, a unit of Blue Owl Capital, regarding its roughly 2.45-gigawatt Project Jupiter data center campus in New Mexico, the company confirmed to reporters. The notice allows Oracle to delay higher rent payments if the facility fails to come online by its planned 2028 date and does not walk away from the deal. Oracle told CNBC that "Project Jupiter remains on our planned schedule. We are fully committed to New Mexico and confident in our path forward," a position co-CEO Clay Magouyrk reiterated on the September 10 earnings call, saying the project would not affect fiscal 2027 revenue or earnings guidance.

Market Reaction and Stock Decline

Oracle shares fell roughly 3 to 3.5 percent after the Bloomberg report, with Blue Owl Capital's stock also declining about 3.6 percent on the same session. Seeking Alpha framed the sell-off as overblown, noting the project remains on schedule and flagging Oracle's $664 billion backlog as support for forecasts of $21-plus FY30 EPS at 30–40 percent growth over the next three years. Coming into the session, Oracle shares were already down roughly 26 percent year-to-date and about 45 percent from their June highs, reflecting prior investor unease over the company's capital spending.

Debt Load and Rising Rates

The Project Jupiter sit in the Stargate AI infrastructure buildout announced earlier this year by President Trump, and a planned natural-gas pipeline intended to fuel the site has faced delays alongside environmental and local opposition. The Financial Times reported that roughly $18 billion in debt tied to the project was already trading at stressed levels, around 89 to 91 cents on the dollar. Sonar Asset Management estimated Oracle's total debt at $125.3 billion as of August 31, with not-yet-launched data center lease agreements totaling $288 billion; only about 13 percent of the $664 billion backlog is expected to convert to revenue within the next 12 months, much of it tied to OpenAI.

Broader AI Infrastructure Concerns

The notice came as the U.S. 10-year Treasury yield reached 5.12 percent on September 23, its highest level since 2007, after the Federal Reserve raised its benchmark rate by 0.25 percentage points on September 16, bringing the target range to 3.75–4 percent. OpenAI separately revised its 2030 infrastructure investment target from $1.4 trillion to $600 billion on September 20, and Nvidia is reportedly considering reducing a conditional pledge of up to $100 billion to a maximum of $30 billion. Sonar Asset Management classified about 120 of 176 AI-sector transactions it analyzed as highly circular, and Goldman Sachs noted that roughly 24 percent of this year's U.S. dollar investment-grade corporate bond supply came from such issuers.

Project Timeline and Outstanding Questions

Project Jupiter is designed as a more than 2.4-gigawatt facility powered by Bloom Energy fuel cells, with Evercore analysts describing the notice as "a pretty sensible" financial precaution rather than a sign the project is being canceled. It remains unclear whether Stack Infrastructure will honor the delay request or challenge it in court, and whether the planned natural-gas pipeline and contested water and air-quality permits will be resolved in time for the targeted 2028 operations date. Blue Owl stated the notice "does not change the financial commitments to this multi-year project," though the $18 billion project's debt continues to trade at stressed levels pending further clarity on construction progress.