Oracle's $18 Billion New Mexico AI Data Center Hits the Wall

AI INFRASTRUCTURE

Oracle has invoked force majeure on its $18 billion New Mexico AI data center, seeking to push back rent payments as power delays mount. Wall Street is already repricing the risk: the project's bank debt trades at 89 cents on the dollar.

Published September 28, 2026 · By Daniel Rao

Update, Sept. 28: the market has priced the wall

Thursday's session put numbers on the fear. Oracle shares fell as much as ~7% intraday to a low of $133.45 before closing around $139.53–139.64, down roughly 3.5–4.4% on 56.2 million shares — about 68% above the three-month average (TradingView; Economic Times). The contagion spread to the project's partners: Bloom Energy, whose fuel cells are meant to power the campus, fell ~6% Thursday, and developer Blue Owl dropped ~4% (Economic Times). Bloom has its own calendar pressure: Barchart notes a securities class action against the company has a lead-plaintiff deadline today, Sept. 28. KeyBanc's Jackson Ader told Investing that Oracle is now in "the most tenuous of cash positions of all the major hyperscalers." And Oracle's Aug. 31 filing disclosed an additional $288 billion in lease commitments (StockTi) — Jupiter is one campus inside a much larger obligation pile. Details also hardened on the pipeline: Energy Transfer's Transwestern unit calls the feeder line the "Green Chile" pipeline, and El Paso Matters reports FERC completed its environmental assessment of the line in September — one permitting box checked, with the state air permit still outstanding (Nov. 23 deadline).

Oracle co-founder and chairman Larry Ellison. His company sent a force-majeure notice last week to the developer of Project Jupiter, its $18 billion AI data-center campus in New Mexico, seeking to defer rent payments if power delays push the opening past 2028. Photo: oracle_images (Flickr), via Wikimedia Commons (CC BY 2.0).

Somewhere outside Santa Teresa, New Mexico, one of the most expensive construction projects in the history of computing is running into the oldest problem in infrastructure: it can't get power.

Last week Oracle sent a force-majeure notice to Stack Infrastructure, the Blue Owl Capital-owned developer building its Project Jupiter AI data-center campus in Doña Ana County — the first step toward deferring rent payments if the facility can't come online as planned. Bloomberg first reported the notice on September 24; Reuters confirmed it independently through a person familiar with the matter, who said the project is facing roughly a one-year delay and that securing power is Oracle's contractual responsibility.

On Monday morning, the market was still digesting it. The Wall Street Journal's premarket "Stocks to Watch" noted Oracle shares falling before the bell, "extending losses from last week, when cracks emerged in a huge, debt-fueled data-center project in New Mexico." Intraday data put the stock around $137.10, down about 1.75%, extending a five-day slide of more than 7%.

This is the story of how the AI buildout's financing machine hit its first real wall — and why the people lending it money are suddenly asking harder questions than the people demanding its output.

What the notice actually does

Start with what force majeure means here, because the legalese matters. Oracle is not walking away from Project Jupiter. Under the lease — described by the Journal as hell-or-high-water, meaning it cannot be terminated and Oracle must pay rent even without secured power — the notice is a mechanism to preserve contractual rights. If Oracle and Stack agree that a power-related force-majeure event has occurred, Oracle could defer the start of its rent payments by up to three years. It would still pay interim costs, and it would still owe full-term rent once payments begin.

"Force-majeure notices are commonplace in developments of this scale and are often used to preserve contractual rights," an Oracle spokesperson said. "They do not, by themselves, establish a project delay or change delivery expectations."

Blue Owl echoed the calm: "Blue Owl, Stack Infrastructure and Oracle remain fully aligned on Project Jupiter. This notice does not change the financial commitments to this multiyear project."

Both statements are technically true and strategically incomplete. Companies do not send force-majeure notices for fun. The notice exists because Oracle believes it may not owe full rent on schedule — and the banks that lent $18 billion against those rents are doing the math.

The power problem

The Journal's September 25 investigation — "Cracks in Oracle's AI Data-Center Build-Out Appear in Massive New Mexico Project" — laid out why Jupiter can't get electrons. The original plan called for on-site gas turbines and diesel generators. Local resistance killed it. The pivot — solid-oxide fuel cells from Bloom Energy, announced around April — has not yet closed the gap, and the air permits for the fuel cells still have not been obtained from the state.

The pipeline meant to feed those generators is its own saga. A roughly 17-mile natural-gas pipeline, planned by Energy Transfer, needs rights-of-way across state trust land. The New Mexico State Land Office rejected the applications in March and again in July, with Commissioner Stephanie Garcia Richard citing emissions and water concerns. The in-service date for the pipeline has slipped from August 15, 2026 to February 1, 2027. The air-permit decision deadline is November 23 — and the state's environment department had not even appointed a replacement hearing officer after the prior one recused herself in August.

Meanwhile, Oracle has reshuffled the project's human architecture too. It removed BorderPlex Digital Assets as its land and power partner; BorderPlex, which began work in late 2024 with early support from Governor Michelle Lujan Grisham, is set to receive a payment to relinquish its land and power rights.

The first phase of the campus was originally expected to be completed in the third quarter of 2028. Reuters' source puts the delay at about a year. Whether the force-majeure mechanism buys Oracle one year or three, the direction is the same: later, not earlier.

The $18 billion question

Project Jupiter is a study in the leverage now underwriting the AI boom. About 20 banks provided $18 billion in construction financing; Blue Owl's funds contributed roughly $3 billion in equity. The campus spans some 1,400 acres near Santa Teresa, with four planned buildings and an on-site microgrid, designed for up to 2.45 gigawatts of capacity — widely described as enough to power roughly 1.8 million homes, though no primary source for that figure could be traced. The workloads it will eventually run belong to OpenAI, and the project is a cornerstone of Stargate, the AI-infrastructure venture unveiled at the White House in the first week of President Trump's second term.

That leverage is now trading at a discount. The Financial Times reported on September 18–19 that syndicate banks including Santander and Jefferies were quoting the Jupiter debt at 89 to 91 cents on the dollar, and that efforts to distribute the loans had stalled. The Journal added that at least one arranging bank sold New Mexico debt below 90 cents — implying paper losses of at least $1.8 billion for the original lenders. Oracle's five-year credit-default swaps hit record levels around 227 to 232 basis points on September 24–25, per Barron's and market data.

The rating agencies got there first. S&P Global Ratings cut Oracle's long-term credit rating to BBB- — one notch above junk — on July 9, citing the AI infrastructure buildout's growing credit risk, with stable outlook. The company is guiding to $90–95 billion in AI capital expenditure for fiscal 2027 against a roughly $42 billion free-cash-flow deficit, with about half of its $638 billion backlog concentrated in OpenAI, per market analysis.

As Sean McDevitt, a partner at Arthur D. Little, told Reuters: "The financing side of the AI buildout is starting to ask much harder questions than the demand side. The underlying demand still appears very strong, but investors and lenders are increasingly focused on how risk is allocated."

Oracle's headquarters in Redwood City, California. The company's $18 billion Project Jupiter financing — arranged by roughly 20 banks — is now trading at 89 to 91 cents on the dollar in secondary markets, per the Financial Times. Photo: Davidlohr Bueso, via Wikimedia Commons (CC BY 2.0).

Why this matters beyond New Mexico

Project Jupiter is one project. But the market is treating it as a stress test for the entire debt-funded AI buildout — and the early returns are instructive.

The AI infrastructure boom runs on a simple loop: capital in, megawatts out, contracted revenue justifying more capital. We traced that loop earlier this month in CoreWeave's $6.4 billion trip to the capital markets — the financing treadmill that defines the neocloud business model. Oracle's loop is bigger, more leveraged, and more concentrated: one anchor tenant, one developer, one site, $18 billion of bank debt.

What Jupiter shows is where the loop breaks. Not on demand — nobody disputes that OpenAI wants the capacity. On the physical frictions the financial models assumed away: permits that don't arrive, pipelines denied twice, fuel cells that can't bridge the gap, communities that don't want gas turbines next door. The 79% of chief economists who expect significant local pushback against data-center expansion, per the WEF's September outlook, are describing exactly this project.

The analysts are splitting the difference. Evercore's Kirk Materne told Barron's that "Project Jupiter is only one part of Oracle's infrastructure strategy, and this announcement is not an indication that this project is going away." Morgan Stanley's credit research, via Lindsay Tyler, was more cautious on Oracle's debt — "with this new overhang exacerbating existing pressures" — while noting that "visibility into underlying contractual terms, and thereby into ORCL's mindset here, remains limited, given the use of private financing by the developer." Goldman Sachs' Ryan Hammond put the macro stakes in context: hyperscalers are on track to issue $250 billion in debt in 2026, with AI capital expenditure at $800 billion this year and $1.1 trillion in 2027.

The contagion is already visible in India, where Oracle Financial Services Software shares tumbled more than 5% on Friday to ₹10,332 on the NSE — a nine-week low and the top Nifty IT loser, per the Economic Times.

Oracle Project Jupiter FAQ

Is Oracle abandoning Project Jupiter? No. The force-majeure notice preserves contractual rights; Oracle says it is "fully committed to New Mexico" and on schedule, and Blue Owl says the notice "does not change the financial commitments to this multiyear project."

What does the hell-or-high-water lease mean? Per the Journal: the lease cannot be terminated and Oracle must pay rent even without secured power; if both sides agree a force-majeure event occurred, the notice could defer rent-start by up to three years. Interim costs still have to be paid, and full-term rent is still owed once payments begin.

Why can't the campus get power? The original plan's on-site gas turbines and diesel generators were killed by local resistance; the Bloom Energy solid-oxide fuel-cell pivot has not closed the gap and air permits have not been obtained (decision deadline Nov. 23); Energy Transfer's ~17-mile gas pipeline needs rights-of-way the New Mexico State Land Office rejected twice (March and July), and its in-service date slipped from Aug. 15, 2026 to Feb. 1, 2027.

What does the market think? FT: syndicate debt quoted at 89–91 cents on the dollar, distribution stalled; Oracle CDS hit a record 227–232 bps on Sept. 24–25; S&P cut Oracle to BBB- (one notch above junk) on July 9. Evercore's Kirk Materne says the notice is not an indication the project is going away; Morgan Stanley's credit desk is more cautious.

What to watch

The following is analysis, not reporting. Three dates will decide whether this is a blip or a template.

First, November 23 — the air-permit decision deadline for the Bloom fuel cells. If the permit slips, the power story gets worse, not better.

Second, the force-majeure negotiation itself. Oracle and Stack must agree that a power-related force-majeure event occurred. The Journal's reporting suggests the lease gives Oracle up to three years of rent deferral if they do. Watch for whether the deferral is framed as a year or the full three — the number will tell you how far behind the project really is.

Third, the secondary loan market. The 89–91 cent quotes are the market's real-time verdict on the deal's risk. If the paper keeps sliding, every other AI-infrastructure financing in the pipeline gets more expensive — and the $250 billion of hyperscaler debt Goldman expects in 2026 will price accordingly.

Oracle says it is "fully committed to New Mexico" and that the project "remains on our planned schedule." The banks quoting its debt at 89 cents are saying something else. One of them is wrong about the price of the AI future. The market is about to find out which.

A note on a different Oracle story: this publication also covered ShinyHunters' claim to have breached FBIJobs.gov through an Oracle PeopleSoft zero-day. That is an entirely separate incident — a cybersecurity story, not an infrastructure-financing one — and none of its facts appear here.

Sources: Bloomberg (Sept. 24, 2026, via Morningstar/Dow Jones Newswires and Reuters); Reuters (Sept. 24, 2026); The Wall Street Journal (Sept. 25, 2026 — "Cracks in Oracle's AI Data-Center Build-Out Appear in Massive New Mexico Project"; Sept. 28, 2026 "Stocks to Watch"); Financial Times (Sept. 18–19, 2026, via Economic Times); Barron's (Sept. 26, 2026); Bisnow; Mobile World Live; ad-hoc-news.de (Sept. 26, 2026); Economic Times (Sept. 26, 2026); Seoul Economic Daily (Sept. 27–28, 2026); MarketBeat (S&P July 9 downgrade). Figures on the September 24 stock session vary by outlet (roughly −3.5% to −7% depending on intraday vs. close timing); the "1.8 million homes" equivalence and $165B project valuation are widely repeated but unattributed — treated here as industry shorthand, not verified fact. Construction-progress figures (26% complete) are single-sourced and not stated as fact. September 28 intraday price data via Finnhub, approximate.

Related: CoreWeave Just Asked Wall Street for Up to $6.4B in One Morning — the financing treadmill behind the AI buildout, now being repriced.