Oracle's New Mexico Megaproject Stalls as Lenders Reprice $18 Billion in Data-Center Debt

Oracle's force majeure notice on its New Mexico data-center campus defers payments if the 2.45-GW Project Jupiter site misses its 2028 target.

Oracle has fired off a force majeure notice to the developer behind its sprawling New Mexico data-center campus, a legal maneuver that shifts the timeline risk of the "Project Jupiter" build onto its partners — and one that has already rippled through the company's bonds and shares.

The notice, sent to STACK Infrastructure and reported by Bloomberg as directed at Blue Owl Capital, is designed to defer contractual payments should the Doña Ana County complex fail to come online by 2028. Oracle insists the project remains on schedule and that it stands fully behind the site. The contractual escape hatch tells a different story.

A 2.45-Gigawatt Campus Meets an Unfinished Grid

Project Jupiter is no ordinary build. The planned 2.45 gigawatts of capacity would be enough, on paper, to power roughly 1.8 million households simultaneously. Spread across 1,400 acres, the campus is meant to anchor the Stargate initiative with OpenAI and was underwritten by $18 billion in construction loans from about 20 banks.

The physical groundwork has not kept pace. A natural gas pipeline from Energy Transfer that was supposed to feed the complex has been pushed back by months after permitting rejections, and a proposed fuel-cell power arrangement with Bloom Energy has yet to bridge the shortfall. Reuters reports the delay could stretch to roughly a year.

For Oracle, the force majeure filing looks less like a negotiating tactic than financial self-protection. Without legal cover, a campus that misses its 2028 target would saddle the company with heavy carry costs — interest and return commitments owed to partners including Blue Owl Capital.

Credit Markets Blink First

The strain is showing up most clearly in debt pricing. Portions of the $18 billion loan package have traded below 90 cents on the dollar, a level the market treats as a red flag for distressed claims. Blue Owl has roughly $3 billion of equity at risk; the investor says its financial obligations are unchanged and that partners remain aligned, though every month of delay pushes out the rich returns the project was meant to generate.

Equity holders have taken their own hit. Oracle closed at €122.98 on the day the reports surfaced, a 3.1% drop, and the stock was quoted at €121.42 in German trading, extending its year-to-date decline to 27%. Over the past seven days the shares have shed 4.3%, and they are down 6.5% since the company reported record first-quarter fiscal 2027 results roughly two weeks ago.

Those results were powered by a 121% surge in cloud-infrastructure revenue. The market's reaction since then suggests investors are growing more focused on the capital intensity of the model than on the top-line momentum. Management, meanwhile, has been trimming headcount even as billions remain tied up in data-center construction — a signal that cost discipline is being applied everywhere except the buildout itself.

Wall Street Splits on the Fallout

Analysts are not of one mind. Stifel Nicolaus reiterated its buy rating and a $200 price target, framing the force majeure notice as a precautionary step. Rothschild & Co Redburn sits on the other side with a sell rating and a $110 target, a call that the New Mexico troubles are likely to reinforce.

Founder Larry Ellison has tried to steady nerves elsewhere, confirming that no disposals had taken place under a prior arrangement and that he has no further intention to sell. Such reassurances carry less weight than the Project Jupiter headlines.

The broader lesson extends well beyond one company. Algorithms can be scaled in seconds; terawatts of firm power, reliable permits and local buy-in take years. Oracle managed to bring 850 megawatts of additional data-center capacity online in the first quarter of fiscal 2027, yet even the best-capitalized consortia cannot sidestep the physics of energy supply. Until those bottlenecks ease, the era in which announcements of astronomical AI capacity lifted share prices on their own appears to be over.