Oracle is seeking to shield itself from potential cost increases associated with a major data center project in New Mexico, according to Bloomberg News, which reported that the company sent a “force majeure” notice to the project’s developer, a unit of Blue Owl Capital. Oracle shares fell around 5% following the report, underscoring how closely investors are monitoring the financial risks surrounding the technology company’s aggressive expansion of AI infrastructure. Reuters could not independently verify the Bloomberg report.

Data Center Costs Become a Strategic Risk

The reported notice is significant because data center construction has become one of the largest capital requirements of the artificial intelligence boom. Oracle has been committing substantial resources to expand cloud and AI computing capacity, while the costs of electricity, construction, equipment and financing have become increasingly important variables in the economics of large-scale infrastructure projects.

The New Mexico development, known as Project Jupiter, is part of Oracle’s broader effort to provide computing capacity for AI workloads. Earlier reports indicated that the project has faced complications surrounding its energy infrastructure, adding to questions about the pace and cost of development.

Financing Pressure Adds to Investor Scrutiny

The reported force majeure notice comes shortly after concerns emerged around financing linked to the New Mexico project. Reuters reported on September 18 that approximately $18 billion in loans tied to an Oracle-leased data center in New Mexico had been quoted at 89 to 91 cents on the dollar by syndicate banks, according to the Financial Times. The report cited concerns including local opposition, Oracle’s rising borrowing and questions surrounding the project’s infrastructure.

Those developments matter because Oracle’s AI expansion is increasingly being evaluated not only on expected cloud demand but also on the capital intensity required to serve that demand. Financing costs, construction delays and infrastructure constraints can affect the timing at which new computing capacity becomes operational and begins generating revenue.

Energy Infrastructure Remains a Key Constraint

Power availability has become a central issue for hyperscale data centers as AI workloads require substantially more electricity than traditional computing infrastructure. Bloomberg has previously reported that Oracle’s New Mexico project faced delays and changes involving its planned natural-gas infrastructure, while New Mexico authorities had rejected a proposed gas pipeline associated with the facility.

For Oracle, such constraints create a difficult balance between accelerating AI capacity and controlling the financial exposure associated with large infrastructure commitments. A force majeure provision can potentially become relevant when extraordinary circumstances affect contractual obligations, although the specific legal and financial implications of Oracle’s reported notice remain unconfirmed.

What Investors Will Watch Next

The immediate focus will be on whether Oracle and the project’s developer reach an agreement over potential cost increases, construction responsibilities and project timing. Investors will also be watching Oracle’s broader AI infrastructure spending, financing requirements and credit metrics as the company continues expanding its cloud business. The latest report does not establish that Oracle is abandoning the New Mexico project, but it adds another uncertainty to an investment cycle in which the scale of AI demand must increasingly be weighed against the cost of building and financing the infrastructure required to support it.