Oracle Stock Plunges as ‘Force Majeure’ Notice Raises New Data Center Concerns
Oracle has invoked a "force majeure" clause for its Project Jupiter AI data center in New Mexico due to potential delays and regulatory hurdles, impacting its planned 2028 opening. This action highlights broader challenges facing data center developers across the U.S., including increased demands on electricity and water resources and growing community opposition. Texas has notably responded by halting new data center permits while assessing the industry's impact.
Oracle's shares plunged after Bloomberg reported that the company invoked a "force majeure" provision for its Project Jupiter, a massive artificial-intelligence data center under development in New Mexico. The provision was sent to Blue Owl Capital, a backer of the project, to defer payments if the facility misses its planned 2028 opening, though Oracle maintains the project remains on schedule. This dispute highlights investor concerns regarding the financial exposure of large AI infrastructure projects and the regulatory obstacles Project Jupiter has already faced, including permitting setbacks for a natural gas pipeline intended to supply the facility.
The broader data center industry across the United States is encountering significant resistance due to the high demand for electricity, water, and grid infrastructure. Research indicates that 45 U.S. projects worth $68 billion were blocked or delayed in the second quarter, often due to community-imposed moratoriums. In response to these concerns, the U.S. House passed the Ratepayer Protection Act to prevent data center electricity costs from being shifted to residential customers, though its progress stalled in the Senate.
At the state level, Texas Governor Greg Abbott ordered an immediate halt to new state-issued data center permits on September 21. This moratorium will remain in effect while state agencies like the Electric Reliability Council of Texas and the Texas Water Development Board assess the industry's demands on electricity and water resources, ensuring data centers contribute to their own infrastructure costs and protect state utilities.