OFSS shares fall 4% as Oracle triggers ‘force majeure’ on data centre project over power delays

Reports coming in for today mention that Oracle Financial Services Software shares declined 43% on September 25 after US parent Oracle issued a "force majeure" notice to a Blue Owl unit, the developer of a large New Mexico data centre, citing potential delays in securing power for the project.

Firms typically invoke force majeure to free themselves from contractual obligations when problems arise beyond their control, a move that can raise concerns among lenders and market participants.

Rather than exiting as the main tenant, Oracle is attempting to delay payments should the data centre dubbed Project Jupiter get derailed and fail to come online in 2028 as scheduled, as per a market note by Bloomberg News, which first noted the development.

Blue Owl, which owns the data-centre developer Stack Infrastructure, stated the notice does not change the financial commitments to this multi-year project.

By invoking force majeure, Oracle extends the period during which it pays Blue Owl the softer development-stage rent.

At 9:45 am on September 25, OFSS shares were trading 4% softer at Rs 10,460 apiece. Oracle owns stake worth Rs 70,000 crore in the firm.

The 1,400-acre Project Jupiter campus, which secured $18 billion in loans from a consortium of banks, according to media notes, is part of Oracle's broader agreement with OpenAI ​to provide AI computing capacity.

The data centre campus has reportedly faced multiple infrastructure setbacks, including delays to a scheduled natural-gas pipeline and legal challenges over water and air-quality permits.

The project is a part of Stargate, an initiative to build AI infrastructure in the US under a $500 billion investment commitment involving OpenAI, SoftBank Group and partners including Oracle.

The massive AI infrastructure build-out has faced mounting challenges, as developers race to secure power and other resources while managing the enormous costs of deploying computing capacity for partners such as OpenAI.

Growing opposition from the public has made data centres a political flashpoint, with communities around data centre projects raising concerns over their impact on local supply of energy, water and other natural resources.

Brokerage William Blair stated while this news intensifies worries around regulatory and power-related delays affecting AI deployments, it anticipates minimal short-term impact on Oracle.

"Practically, fiscal 2027 should not be affected, since Jupiter contributes no topline this year."