Tag: Blue Owl

  • Power Constraints Delay Oracle-Blue Owl AI Data Center, Raising Financing Questions

    Power Constraints Delay Oracle-Blue Owl AI Data Center, Raising Financing Questions

    A New Mexico AI Campus Hits a Snag

    A large data center project tied to Oracle and Blue Owl is facing a potential one-year delay, putting a spotlight on the financial and operational risks behind the AI infrastructure boom. The campus, known as Jupiter, is being developed by a Blue Owl unit, STACK Infrastructure, to support AI infrastructure linked to OpenAI.

    Oracle has issued a force majeure notice related to possible delays at the site. People familiar with the matter told Reuters that securing enough power for the facility was a central concern.

    Why Power Is the Bottleneck

    AI data centers consume vast amounts of electricity, making reliable power access a critical part of infrastructure planning. When power contracts or grid connections slip, construction timelines and expected returns can move with them.

    Billions in Equity and Debt at Stake

    Blue Owl has roughly $3 billion of equity invested in the project, according to a person familiar with the terms cited by Reuters. Oracle is responsible for covering the project’s debt costs. A delay of about a year could affect when the facility becomes operational and when project-linked returns begin to scale.

    Investors Scrutinize Contract Protections

    The situation is being watched across the AI infrastructure financing market. Bankers and investors are reviewing how contracts allocate risks from unexpected delays. Lenders are also looking more closely at how AI infrastructure risks are shared, even as demand for computing capacity remains strong. Higher U.S. interest rates are adding pressure to financing economics.

    A Wider Ripple Effect

    The delay has reportedly influenced discussions around other proposed data center financings, including an Ohio project involving SB Energy and OpenAI. That suggests the Oracle-Blue Owl case could become a reference point for how the market prices and structures large AI infrastructure deals.

    The takeaway: AI’s buildout is not only a technology race. It is also a test of power procurement, construction execution and financial risk management.

  • OFSS Shares Slide as Oracle Flags Power Delays at Project Jupiter AI Campus

    OFSS Shares Slide as Oracle Flags Power Delays at Project Jupiter AI Campus

    Oracle Financial Services Software (OFSS) shares fell more than 5% intraday on Friday, September 25, after parent Oracle issued a force majeure notice covering possible power delays at its Project Jupiter data center in New Mexico. The campus is intended to provide AI computing capacity for OpenAI.

    The stock touched Rs. 10,332 on the National Stock Exchange before recovering to Rs. 10,572, down 3.2% for the session. For the week, OFSS was down about 11%, putting it on track for its steepest weekly decline since January 2025, when it fell more than 12%.

    Why Oracle issued the notice

    Blue Owl’s STACK Infrastructure is developing the 1,400-acre Jupiter campus in Doña Ana County. A person familiar with the agreement told Reuters that Oracle issued the notice because of possible delays in securing power. Under the contract, Oracle is responsible for arranging power for the site.

    Bloomberg reported that Oracle aims to delay certain payments if Jupiter misses its planned 2028 opening. Oracle is not seeking to exit as the campus’s main tenant, and a person familiar with the agreement said the company cannot terminate the lease.

    Oracle said Jupiter remains on its planned schedule. Blue Owl said the notice does not change the companies’ financial commitments. Both companies maintain they remain committed to the project.

    Financing and project pressures

    Jupiter has already faced setbacks involving a planned natural gas pipeline and challenges related to water and air-quality permits. The campus is part of Stargate, the AI infrastructure initiative involving OpenAI, Oracle, SoftBank and other partners. Securing power remains a key step toward opening the facility.

    Blue Owl has about $3 billion of equity in Jupiter, while Oracle is responsible for debt costs, according to a person familiar with the agreement. Blue Owl earns a lower return during construction and expects a higher return after completion. A later opening would push back the start of those higher payments.

    Concerns about financing have also weighed on the project. Last week, banks quoted about $18 billion in loans tied to the campus at 89 to 91 cents on the dollar, as worries about Oracle’s borrowing and site setbacks made the debt harder to sell to investors.

    Near-term revenue impact

    Brokerage William Blair expects limited near-term effects on Oracle despite the power and regulatory concerns. It said Jupiter will contribute no revenue in Oracle’s fiscal 2027, leaving that year’s revenue unaffected by the campus’s delivery timetable.

    The notice has renewed attention on the costs and schedules behind large AI data centers. It does not indicate that OpenAI has reduced its demand for computing capacity. For OFSS, the development added to a week of sharp share losses as investors track Jupiter’s power supply and its planned 2028 opening.