Oracle Invokes Force Majeure on New Mexico Data Center as Cash Burn Deepens
Published on 09/24/2026 at 16:40 | Editorial boerse-global.de
Oracle has served a force majeure notice to the developer behind its Jupiter data-center project — a unit of Blue Owl Capital — a move that would preserve the software giant's right to defer payments should the New Mexico facility fail to come online as scheduled in 2028. Bloomberg reported the filing, and investors reacted swiftly: the stock tumbled 7.4% to €117.50.
The notice throws a spotlight on the fault lines running beneath Oracle's breakneck infrastructure expansion. Jupiter ranks among its flagship efforts to scale cloud capacity for artificial intelligence, yet the venture has been dogged by permitting delays, litigation and local opposition, while S&P has cut its credit rating. Loans tied to the project have come under pressure as a result. By tying contractual payment obligations to actual construction progress, management is shielding itself from premature cash outflows — though for shareholders, the more pressing concern is that new compute capacity may now arrive later than promised. The shares have lost 29% since the start of the year.
Record Backlog, Negative Free Cash Flow
The standoff lands in the middle of a colossal upfront spending cycle. Operating cash flow climbed to a record $23 billion in the first quarter of fiscal 2027, but capital expenditure over the same stretch reached $28 billion, pushing free cash flow to minus $5 billion. Management is holding firm on a full-year CapEx forecast of $90 billion to $95 billion.
Those sums sit alongside a parallel cost-cutting drive. Roughly a week ago Oracle launched a fresh round of layoffs affecting about 2,500 employees, with some teams absorbing double-digit percentage reductions. Pressure is also building in the legacy software business, where third-party maintenance providers such as Australia and New Zealand-based Datacom are undercutting Oracle's own pricing.
Should investors sell immediately? Or is it worth buying Oracle?
Cloud Momentum Still Running Hot
Operationally, the AI boom continues to flatter the top line. Cloud infrastructure revenue jumped 121% to $7.4 billion in the first quarter of fiscal 2027, with more than 300,000 graphics processors deployed during the period running at 97.9% utilization. Total revenue rose 30% year over year to $19.3 billion, earnings per share came in at $1.92, and the company lifted its full-year revenue guidance to at least $90 billion. Contracted but undelivered performance obligations stood at $664 billion — a figure that underscores the platform's potential while simultaneously confronting management with an operational challenge: honoring those agreements demands a rapid buildout of computing capacity, which ties up enormous financial resources and drives up debt. Long-term leases and guarantees for data centers form the bulk of that burden.
Payments Push Meets Blockchain Rails
Beyond the data-center drama, Oracle is courting financial institutions with a different proposition. The company plans to integrate interfaces built on the ISO 20022 standard and connect services such as Oracle Banking Payments to the Swift Ledger, with features for managing tokenized deposits, stablecoins and central bank digital currencies, plus AI-driven automated monitoring. The release is slated for fiscal 2027. The play responds to a broader push by banks to link existing transaction systems with blockchain technology, though whether the platform pays off financially will hinge on actual usage intensity — specifically, whether lenders graduate from pilot projects to production systems and thereby lift utilization of Oracle's databases.
Industry-specific applications are advancing on other fronts as well. At a sector conference in Orlando yesterday, Oracle unveiled a specialized documentation system for cancer care, part of an effort to entrench itself in the medical field and bind institutions to its software services over the long haul.
Market Focus Shifts to Sustainability
For investors, the lens has changed. Where order growth once dominated the narrative, the question now is whether the massive investment program is sustainable — and the persistent upfront outlays for computing infrastructure are visibly weighing on profitability. That caution showed up in yesterday's session, when the stock closed 2.6% lower at €126.84, bringing its year-to-date decline to 24%. A durable turnaround will require the newly introduced software offerings to demonstrate they can generate reliable returns against rising infrastructure costs.
Whether the growth engine holds its pace now depends heavily on how quickly the contractual and construction hurdles surrounding large-scale projects like Jupiter can be cleared.
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