Oracle's 'force majeure' notice raises questions about the company's ability to deliver on AI data centers

Oracle's 'force majeure' notice raises questions about the company's ability to deliver on AI data centers Illustration by Thomas Fuller/SOPA Images/LightRocket via Getty Images Oracle's move to protect itself against a potential delay for its flagship AI data center project has Wall Street questioning whether the company can deliver the capacity needed to support its AI business.Bloomberg reported Thursday that Oracle sent a force majeure notice to Blue Owl Capital related to Project Jupiter, a planned AI data center in New Mexico. Such notices can allow companies to suspend some contractual obligations when events outside their control disrupt a project. Oracle said the project remains on schedule.A Blue Owl spokesperson confirmed Oracle's notice in a statement."Blue Owl, STACK Infrastructure and Oracle remain fully aligned on Project Jupiter," the spokesperson wrote in the statement. "This notice does not change the financial commitments to this multiyear project."Oracle shares were down about 4% on Thursday afternoon amid investor questions about the company's ability to deliver on its massive AI infrastructure expansion.The notice "signals the company's own risk assessment on execution has shifted enough to warrant legal cover," RBC Capital Markets analyst Rishi Jaluria wrote in a note to investors, meaning Oracle believes the risk of delay has increased.Oracle has borrowed tens of billions of dollars to finance new data centers as it races to meet what it says is surging demand for AI computing. That strategy depends not only on signing customers but also on bringing enough new capacity online to convert its growing backlog of contracts into revenue.Business Insider previously reported that some banks and institutional investors were growing wary of taking on too much exposure to Oracle, as lenders sought to distribute debt tied to its Stargate data centers.Oracle reported $28.5 billion in first-quarter capital expenditures, up from $8.5 billion a year earlier, and maintained its fiscal 2027 capital expenditure forecast at $90 billion to $95 billion.Project Jupiter is one of the facilities that Oracle is counting on to turn that backlog into revenue, Jaluria wrote. "Any slippage in the 2028 timeline has direct implications for capacity delivery and revenue recognition given Oracle's supply-constrained posture," he wrote. Evercore called the reported notice "a pretty sensible move" to align Oracle's revenue and expenses if the project is delayed and said it "is not an indication that this project is going away."William Blair likewise said the immediate financial impact should be limited because Project Jupiter is not expected to contribute revenue in Oracle's current fiscal year, though it said investors will remain focused on whether delays to AI data centers push back future cloud revenue.Have a tip? Contact Ashley Stewart via email at astewart@businessinsider.com or Signal at +1-425-344-8242. Use a personal email address and a nonwork device; here's our guide to sharing information securely. Read next Alex is a reporter at Business Insider writing about how people, from billionaires to penny-pinchers, save, invest, and manage their money. He previously covered private credit and equity, real estate, and real estate technology for Business Insider.Recently, he's covered Steve Schwarzman's hidden family office, private capital's push into your retirement account, a massive Airbnb tax-break unlocked by President Trump, and the ex-McKinsey consultant connecting Zohran Mamdani to the business world. According to one Fortune 500 CEO, he's a "fringe reporter."Before joining Business Insider in 2019, he worked for Bridgewater Associates and Peloton. He is the interim vice-chair of the Insider Union.He welcomes any and all reachouts, prioritizes his source's safety, and has a long record of working with confidential sources to tell deeply reported, complicated stories. He loves to yap.Get in touch! Contact this reporter via encrypted messaging app Signal at @alexnicoll.01 using a non-work phone, email at anicoll@businessinsider.com or alexonicoll@protonmail.com, or Twitter DM at @nicollsanddimes. Oracle Artificial Intelligence Enterprise Software More