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Why Oracle shares fell 5% over New Mexico data center cost concerns
Oracle shares fell 5% after a force majeure notice linked to its New Mexico data center raised concerns over project costs, delays and $18 billion debt.
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Oracle shares fell about 5% on Thursday after reports that the company sent a “force majeure” notice linked to its New Mexico data center project, raising concerns about costs and delays. The notice is tied to Project Jupiter, a major data center campus in New Mexico. Oracle is reportedly trying to protect itself from higher expenses linked to the project.
Bloomberg first reported the notice, citing people familiar with the matter. Oracle sent the notice to the project’s developer, a unit of Blue Owl Capital. Oracle is looking to delay payments on the data center campus if it does not become operational as expected in 2028.
Oracle data center payments
The move has raised concerns among investors because Project Jupiter is a major part of Oracle’s plans to expand its AI infrastructure. Any delay could add pressure to the company’s spending and financial commitments.
Project Jupiter remains on track
Oracle, however, said the project is still moving ahead as planned. “Project Jupiter remains on our planned schedule,” Oracle said in a statement to CNBC. The company also said it remains committed to New Mexico and is confident about the project’s path forward.
Blue Owl Capital also confirmed the notice but said it does not change its financial commitments to the project. “This notice does not change the financial commitments to this multi-year project,” Blue Owl said in a statement to CNBC.
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Stargate AI project faces hurdles
Project Jupiter is part of the wider Stargate AI infrastructure buildout linked to President Donald Trump. The project has faced several problems, including regulatory hurdles and opposition from local groups. Local opposition to data centers has also grown ahead of the upcoming midterm elections, while environmental groups have raised concerns about the impact of large data center projects.
Oracle had previously tried to reassure investors about Project Jupiter. Co-CEO Clay Magouyrk said on Oracle’s Sept. 10 earnings call that the project would not affect the company’s previously announced fiscal 2027 revenue or earnings guidance.
$18 billion Oracle debt concern
Another concern is the $18 billion in debt tied to the data center, which has already been trading at stressed levels, according to the Financial Times. This has added to investor concerns about the financial risks surrounding the project.
The combination of potential project delays, higher costs, regulatory problems and large debt commitments appears to have increased investor concerns, contributing to the sharp fall in Oracle shares on Thursday.
Therefore, Oracle shares fell because investors reacted to news of the force majeure notice and the possibility of payment delays on Project Jupiter, even though Oracle and Blue Owl said the project remains on track and their financial commitments have not changed.
