Sources: Oracle sent a force majeure notice to Blue Owl to delay payments on the 2.45GW Project Jupiter data center in New Mexico if it fails to launch in 2028

Your cloud computing costs are unlikely to rise unexpectedly next year due to data center delays.

Oracle has reportedly issued a "force majeure" notice to Blue Owl Capital concerning its Project Jupiter data center in New Mexico. This notice, disclosed by sources to Bloomberg, aims to shield Oracle from potential cost overruns and allows for a delay in payments if the 2.45GW facility does not become operational by its target launch date in 2028. The news led to a 4% drop in Oracle's shares on Thursday. Project Jupiter is a significant data center development, and Oracle's move signals potential challenges or renegotiations related to its construction timeline and associated financial commitments. The specifics of the notice and Blue Owl's response are not yet detailed, but it indicates Oracle's effort to mitigate financial risks tied to the project's completion.

The force majeure notice from Oracle suggests a growing trend of hyperscalers seeking to de-risk massive infrastructure investments, particularly in areas facing potential supply chain or construction challenges. This move by Oracle indicates a more assertive stance in managing capital expenditures and contractual obligations in the face of escalating data center development costs and uncertain timelines. It signals that financial protections are becoming a key consideration for large-scale technology projects, potentially impacting how future deals are structured.

This development could put pressure on data center developers like Blue Owl to meet aggressive deadlines or risk financial penalties, affecting their project financing and investor confidence. For other companies relying on these large-scale data centers for their AI and cloud operations, it highlights the underlying risks in the physical infrastructure build-out. Investors should watch how Oracle and Blue Owl resolve this situation, as it may set a precedent for how similar project delays and cost escalations are handled across the industry.