According to Zhitong Finance APP, the AI computing infrastructure expansion blueprint of database software and AI cloud computing supergiant Oracle Corp (ORCL.US) is undergoing a test that transmits from energy supply and AI cloud computing facility engineering delivery to contractual liability and credit market pricing. The obstruction of Project Jupiter's energy support has made the market pay closer attention to how potential delivery delays could affect contract payment arrangements, cash flow realization, and credit market debt repayment, further deepening market concerns about Oracle and related project financing risks.
Oracle is taking measures to avoid accumulating costs from a large data center under construction in New Mexico, adding further uncertainty to a project already plagued by opposition and regulatory setbacks. According to the latest media reports, people familiar with the matter said the tech giant has sent a force majeure notice to a company under project developer Blue Owl Capital Inc. These people said Oracle is not trying to exit its role as the primary tenant of the project, but rather hopes to delay payments if the data center project known as Project Jupiter is obstructed and cannot commence operations as planned in 2028. These people requested anonymity because they were discussing non-public matters.
After the news emerged, Oracle shares fell as much as 4% in pre-market trading on Thursday, September 24, and dropped more than 5% after the US market opened. The company still stated that the project is progressing on schedule and reiterated its commitment to New Mexico. The information disclosed so far points to advance arrangements for potential delay costs, and it cannot yet be concluded that Oracle will exit the project or has already obtained a payment waiver.
Stargate Meets Delivery Threshold: Oracle Seeks Payment Space for Potential Delays
The engineering constraints behind this dispute are very specific: Project Jupiter is designed for an electricity scale of 2.45 gigawatts and plans to rely on Bloom Energy's natural gas fuel cells for power, so whether the natural gas pipeline can be put in place directly relates to whether the power generation system, server room commissioning, and computing delivery can connect. The New Mexico State Land Office previously rejected the relevant pipeline route application again, involving disputes over greenhouse gas emissions, water resources, and local public benefits. The commissioning time of the supporting pipeline has been postponed to February 1, 2027.
From the perspective of data center engineering economics, between being able to sign computing orders and being able to deliver billable computing capacity on schedule, there still lies fuel supply, power supply reliability, environmental permits, and full system acceptance. Any delay in a key link could widen the gap between upfront construction expenditure and subsequent revenue realization.
The project's financing structure makes this time gap even more sensitive: Blue Owl Capital's Stack Infrastructure is responsible for development, Blue Owl provides equity funding, about 20 banks provide $18 billion in project loans, and Oracle as the primary tenant takes on the campus capacity and serves downstream computing demand including OpenAI. If Oracle successfully delays payments, the time for developers to receive cash may shift accordingly, but construction expenditure and financing obligations may not necessarily pause in sync. Analysis from Quinn Emanuel Urquhart & Sullivan emphasizes that force majeure relief depends on specific contract terms, and a performance grace period in one contract will not automatically cover other financing or power supply contracts. From this reasoning, the payment buffer Oracle seeks may translate into a funding gap that project shareholders and lenders need to reassess.
When uncontrollable problems arise, companies typically invoke force majeure to seek exemption from contractual obligations. In this case, Oracle hopes to protect its contractual rights when construction progress is delayed. However, whether this move can exempt Oracle from previously agreed financial obligations remains uncertain. "Project Jupiter remains on our established schedule," an Oracle spokesperson said, but declined to comment on the notice. "Our commitment to New Mexico is unwavering, and we are confident in future progress." A representative of Blue Owl Capital, which owns data center developer Stack Infrastructure, declined to comment.
This large project in southern New Mexico is an important component of the Stargate AI infrastructure construction plan. US President Donald Trump previously announced the plan together with senior executives of Oracle, OpenAI, and SoftBank Group. Among a series of US domestic investment commitments vigorously promoted in the early part of his second term, this plan was the most high-profile project. At the time, Trump called it a "massive investment," unprecedented in scale. Nearly two years later, this campus designed for an electricity scale of 2.45 gigawatts—equivalent to the power needed to supply about 1.8 million households at any given time—has encountered serious setbacks, including the rejection of a permit application critical to its energy supply plan.
As resistance to the broader AI data center construction boom intensifies, the project is becoming an iconic case and has evolved into a political controversy before the US midterm elections, potentially turning related elections into a referendum on this construction wave. Even if this force majeure notice is only a precautionary measure to gain some room for maneuver, it could unsettle lenders supporting the project. A person familiar with the matter said debt related to the project's development is already trading at stressed levels, priced below 90 cents on the dollar. A syndicate of about 20 banks provided $18 billion in loans to finance the construction of the data center campus. This is one of several massive debt deals supporting the AI infrastructure boom.
The notice could also reignite market questions about the firmness of data center lease contracts. Such contracts typically include a clause allowing customers to exit if services fail to start on schedule. For example, earlier this year, Alphabet's Google agreed to pay Elon Musk's SpaceX for computing power through mid-2029 but retained the right to terminate the contract if computing services were not obtained by a specified date. When events such as severe weather or geopolitical conflicts disrupt supply and prevent companies from fulfilling contracts, force majeure clauses are relatively common in energy and commodities. According to a recent client note from Quinn Emanuel, these clauses are also increasingly common in data center development projects. "In AI data center projects, force majeure is no longer a boilerplate clause at the end of a contract," the June note said. "It is a core litigation and risk allocation tool that can determine whether a delay remains localized or produces ripple effects across a project's construction, customer, power, insurance, and financing documents."
OpenAI signed a $400 billion agreement with Oracle and SoftBank last year to support the development of five US data centers, including this project in New Mexico. Blue Owl Capital portfolio company Stack Infrastructure is responsible for developing the facility, while Blue Owl Capital itself has committed equity funding. A key natural gas pipeline project developed by Energy Transfer LP was originally scheduled to begin operations this month to supply fuel for Project Jupiter, but due to repeated rejections by the New Mexico State Land Office of its proposed pipeline route, the project was delayed by nearly six months to February 1, 2027. Project Jupiter is designed to be powered by Bloom Energy's natural gas fuel cells.
Oracle has launched a public relations campaign in New Mexico to counter opposition. Whether the company can win support from project skeptics remains unclear. According to documents previously reviewed by Bloomberg, before the full details of Project Jupiter were announced, developers had already worked with local officials on incentive plans and a strategy for gradually disclosing information to the public. Local residents did not learn of its connection to Oracle and OpenAI until after the project was approved.
Orders Are Large, but Cash Flow Is More Critical: High Concentration and High Leverage from Overreliance on OpenAI Orders Continue to Face Market Scrutiny
Market disagreement over Oracle centers on how quickly huge AI orders can be converted into cash flow and at what return on capital. In the first quarter of fiscal 2027 ending August 31, 2026, Oracle's cloud infrastructure business revenue reached $7.4 billion, up 121% year over year, and remaining performance obligations (RPO) reached $664 billion. However, the company expects about 13% of that to be recognized as revenue in the next 12 months. This means the enormous forward contracts need to be gradually realized through continuous construction and service delivery.
OpenAI is an important customer in its AI expansion, so investors also need to assess OpenAI's commercialization revenue, financing capacity, and future pace of computing procurement. However, this customer concentration concern is increasingly overlapping with Oracle's own intensity of capital investment. In the latest quarter, the company's capital expenditure reached $28.499 billion, exceeding operating cash flow of $23.103 billion, with free cash flow at negative $5.396 billion. Operating cash flow also included about $11.4 billion in customer prepayments with significant financing components. These prepayments provide funding support for expansion while corresponding to services that still must be delivered in the future. As of the end of the quarter, total book borrowings on the balance sheet were about $125.337 billion, a figure that does not yet include all lease obligations.
Therefore, if the project is delayed in commencing operations, it could further lengthen the cycle of "first investing construction funds, then recovering cash through delivery," making liquidity management and financing costs important variables affecting shareholder returns. The credit market has already become more vigilant about these issues. Reuters disclosed on August 4 that Oracle's five-year credit default swap (CDS) spread had previously risen to 215 basis points, an 18-year high. S&P downgraded its rating to BBB− in July, the lowest tier of investment grade. The 215 basis points here is data from that time, not an immediate quote from September 24. Meanwhile, the Jupiter project loan quote disclosed on September 18 had fallen to about 89-91 cents on the dollar.
The company's CDS reflects the price of buying protection against Oracle's credit risk, while the project loan discount reflects investors' valuation of specific development financing. Together, they show that the market is raising its requirements for repayment uncertainty. From an investment strategy perspective, the core test Oracle faces is aligning customer demand, energy availability, engineering delivery, contract payments, and debt servicing in time. If delays push revenue later while construction and financing expenditures continue, even if forward orders do not disappear, the project's return on capital may decline. If credit spreads widen further, new financing may require paying a higher risk premium.
Apollo chief economist Torsten Slok, in a September 16 analysis, also linked widening CDS for hyperscale cloud providers with debt financing expansion, free cash flow pressure, and uncertainty about AI investment payback. Therefore, the "AI bubble" doubts surrounding Oracle most need to be answered with on-schedule delivery, sustained collections, and leverage improvement. Project Jupiter happens to turn these issues, previously hidden in long-term growth forecasts, into observable engineering and contractual milestones.