Oracle's Force Majeure Notice Puts a 2028 Deadline—and a $664 Billion Backlog—Under the Microscope

Oracle serves force majeure on its New Mexico data-center campus, citing a delayed gas pipeline and $18 billion in bank debt.

Oracle has served a force majeure notice on STACK Infrastructure and a subsidiary of private equity firm Blue Owl Capital covering "Project Jupiter," the sprawling data-center campus it is building in New Mexico. Word of the filing, first reported by Bloomberg, landed Thursday and knocked the software maker's shares down 3.1% to EUR 122.98.

At issue is a 1,400-acre site slated to deliver 2.45 gigawatts of computing capacity, a cornerstone of the Stargate initiative with OpenAI. Oracle insists the project remains on schedule. According to Bloomberg, however, the company wants the contractual clause in hand so it can defer future lease payments should the campus fail to come online as targeted in 2028.

A Pipeline Slips, and the Clock Starts Ticking

Market watchers read the maneuver as a warning sign on power supply. A gas pipeline serving the site has already been pushed back to February 2027 after permitting snags. The campus carries $18 billion in bank debt, and lenders are growing restless: loans tied to Project Jupiter changed hands at 89 to 91 cents on the dollar during Thursday's session.

Blue Owl, which has plowed roughly $3 billion of equity into the campus, says the notice does not alter existing agreements. Oracle, for its part, carries the debt-service obligation under the contract. RBC analyst Rishi Jaluria points to elevated execution risk—any slip in the 2028 timeline would immediately crimp the delivery of computing capacity and the revenue recognition that follows. William Blair takes a softer near-term view, noting that Project Jupiter was never expected to contribute revenue in the current fiscal 2027 anyway.

The question now is whether Oracle can push payment obligations past completion and shield its operating balance sheet, or whether it faces heavy upfront infrastructure costs with no offsetting income.

Cloud Demand Keeps the Growth Story Alive

Strip away the construction risk and the underlying business is still expanding at a furious clip. Oracle reported fiscal 2027 first-quarter revenue of $19.3 billion, up 30% year over year, with cloud infrastructure sales surging 121% to $7.4 billion. The company brought 850 megawatts of additional data-center capacity online during the quarter.

The order book is the real anchor. Remaining performance obligations stood at $664 billion at quarter-end, roughly $300 billion of which stems from agreements with OpenAI. New AI contracts added more than $30 billion during the period. Overseas, subsidiary Oracle Japan lifted cloud revenue 31.7% in the first quarter, evidence that enterprise migration to the cloud continues apace.

Capex, Debt, and a Stock Down 26% This Year

Funding that growth is another matter. Capital expenditure rocketed to $28.5 billion in the first quarter, against $8.5 billion a year earlier, driving free cash flow to negative $5.4 billion for the three months through August. Management projects up to $95 billion in spending for the full fiscal year. On top of roughly $125 billion in debt, Oracle carries long-term data-center lease commitments of $288 billion.

The equity has paid for it. The stock is off 26% since the start of the year, and the shares have shed 6.5% since the company posted those record quarterly numbers about two weeks ago. A further 1.5% has come off since, as management trimmed headcount even while capital stays locked up in megaprojects. Founder Larry Ellison has tried to steady nerves elsewhere, confirming that no disposals took place under a prior arrangement and that no further sales are planned—though that signal has done little to offset the Jupiter news. Over the past seven days alone, the shares have lost 4.3%.

November 2026: The First Real Test

Two paths now diverge. If Oracle can synchronize grid connections and fuel-cell capacity ahead of 2028, the fundamental re-rating implied by that $664 billion backlog stays intact. If the contractual deadline protection collapses and delayed power hookups force early compensation payments, margins and cash-flow projections come under real strain.

The next hard catalyst is already circled: by November 23, 2026, regulators are due to rule on an outstanding air-quality permit for the New Mexico site. Markets will treat that date as the first genuine stress test of whether the official timeline holds. Until the physical bottlenecks in power and siting ease, pressure on the valuation looks set to persist—the era in which announcements of astronomical AI capacity sent the stock higher on their own is, for now, over.