Oracle shares fell nearly 5.5% in early trading Thursday after Bloomberg reported that the technology company had invoked a "force majeure" provision to protect itself from potential costs associated with delays at Project Jupiter, its massive artificial-intelligence data center development in New Mexico.
The company sent the notice to a unit of Blue Owl Capital, which is backing the project, according to people familiar with the matter cited by Bloomberg. Oracle is seeking to defer payments if the facility misses its planned 2028 opening, rather than withdraw from the development.
Oracle shares were down approximately 5.5% at 9:46 a.m. Eastern, reflecting investor concerns about the financial exposure associated with large AI infrastructure projects. The reported notice introduces another uncertainty for a development that has already encountered regulatory obstacles and opposition from local communities.
A force majeure provision generally allows companies to seek relief from contractual obligations when extraordinary circumstances beyond their control disrupt an agreement. Oracle's notice does not establish that Project Jupiter will miss its opening date or that the company will ultimately be relieved of its financial commitments.
"Project Jupiter remains on our planned schedule," an Oracle spokesperson told CNBC. "We are fully committed to New Mexico and confident in our path forward."
Blue Owl also sought to reassure investors, saying the notice "does not change the financial commitments to this multi-year project."
The dispute over Project Jupiter comes as developers across the United States face growing resistance to the construction of energy-intensive data centers. The rapid expansion of AI computing has increased demand for electricity, water and grid infrastructure, prompting communities and regulators to question who should bear the costs.
Research group Data Center Watch reported that 45 U.S. projects representing $68 billion in investment were blocked or delayed during the second quarter. The findings illustrate the scale of the challenges facing developers seeking to build facilities capable of supporting increasingly powerful AI systems.
"Communities nationwide imposed data center development moratoriums, often preemptively before developers expressed interest or filed permit applications," the group said. According to the report, roughly 30 state legislatures have introduced measures addressing data center development.
Project Jupiter has encountered its own infrastructure difficulties. A natural gas pipeline intended to supply the New Mexico facility has faced repeated permitting setbacks, pushing its expected start date from September 2026 to February 2027.
The broader controversy has also reached Congress. The House passed the Ratepayer Protection Act by a bipartisan vote of 417-3 last week, seeking to prevent the costs of electricity infrastructure built for large data centers from being passed on to residential and other existing utility customers.
The legislation would require state utility regulators to consider standards under which large electricity customers provide financial assurances or contribute toward necessary grid upgrades. Its progress stalled in the Senate after Democratic Sen. Martin Heinrich objected to Republican Sen. Jon Husted's request for unanimous consent, with the two lawmakers favoring different approaches to protecting consumers.
Texas has taken a more immediate regulatory approach. Gov. Greg Abbott ordered a halt to new state-issued data center permits on September 21 while state agencies assess the industry's demands on electricity and water resources.
"Simply put, Texans must come first," Abbott said. "Data centers must pay their own way, protect our grid and water, and complete the ERCOT and TWDB audits. Until they do, TCEQ will issue no permits sought by data center projects."
The Electric Reliability Council of Texas is examining proposed data center connections to the state's electricity network, while the Texas Water Development Board is reviewing water consumption. State regulators have been instructed to use those findings when assessing future development applications.
