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Blue Owl said Oracle's notice did not alter the parties' commitment to the project.As a result, Oracle shares dropped around 3.5% on Wall Street, while those of Blue Owl fell around 4%.
Oracle is aiming to delay payments should the data centre dubbed Project Jupiter get derailed and fail to come online in 2028 as planned, rather than exiting as the main tenant, Bloomberg News reported.
Companies typically invoke force majeure to free themselves from contractual obligations when problems arise beyond their control.
"The underlying demand still appears very strong, but investors and lenders are increasingly focused on how risk is allocated.
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The shares of Oracle Financial Services Software (OFSS) tumbled more than 5% on Friday after its US-based parent Oracle sent a 'force majeure' notice to developer Blue Owl to protect itself from potential delays at a massive data centre project in New Mexico, triggering worries through the trillion-dollar market for AI infrastructure financing.OFSS shares tumbled more than 5% to trade at Rs 10,332 apiece on NSE, marking the lowest level seen by the stock in more than nine weeks since July 23. It is currently the top loser on the Nifty IT index, which itself is down around 1%.Oracle's force majeure notice was issued for Jupiter, a data centre campus which Blue Owl unit STACK Infrastructure is building to support ChatGPT-maker OpenAI, marking the latest setback for a sector where lenders and investors are growing more cautious about financing the industry's breakneck expansion. Blue Owl said Oracle's notice did not alter the parties' commitment to the project.As a result, Oracle shares dropped around 3.5% on Wall Street, while those of Blue Owl fell around 4%. Oracle is aiming to delay payments should the data centre dubbed Project Jupiter get derailed and fail to come online in 2028 as planned, rather than exiting as the main tenant, Bloomberg News reported. Companies typically invoke force majeure to free themselves from contractual obligations when problems arise beyond their control."The financing side of the AI buildout is starting to ask much harder questions than the demand side," Reuters quoted Sean McDevitt, a partner at management consulting firm Arthur D. Little. "The underlying demand still appears very strong, but investors and lenders are increasingly focused on how risk is allocated."Notably, the latest development comes as the program was being delayed by a year, Reuters quoted a person familiar with the matter as saying. Notably, Blue Owl has about $3 billion of equity invested in the project and earns a lower return during construction, with returns increasing once the data centre is completed, the report added.Earlier this month, OFSS shares faced a sharp downturn after the Financial Times reported that around $18 billion in loans tied to an Oracle-leased data centre in New Mexico has come under pressure, with loans quoted at 89 to 91 cents on the dollar by syndicate banks including Santander and Jefferies.This came amid concerns regarding the escalating local opposition to the 1,400-acre "Project Jupiter" campus in Dona Ana County over fears it would impact water supply and air quality could derail Oracle's massive AI infrastructure build-out, the FT report said. OFSS is the Indian subsidiary of Oracle.OFSS shares have fallen more than 12% in one week, underperforming the Nifty IT index which has fallen nearly 3% at the same time. The stock is overall down 11% in one month. However, OFSS shares have bucked the trend to deliver 36% returns overall in 2026 so far, even as other IT peers fell and pushed the Nifty IT index down more than 26%.In the longer term, OFSS shares jumped 17% in one year, and delivered multibagger returns of 153% in three years and 122% in five years. The company has a market capitalisation of nearly Rs 90,900 crore.
