Oracle Calls Force Majeure Already?
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What is Oracle’s new force‑majeure claim on the New Mexico data‑center project?
Oracle is forcing the issue with AI. Motley Fool Hidden Gems Investing starts now. Welcome to Molly Fool Hidden Gems Investing. I'm your host, Tyler Crow, and today I'm joined by longtime full contributors, Lou Whiteman and John Quast. And guys, you know, we had a plan for today, but using the term from one of our prior hosts, uh, the news fairy showed up uh right before we recorded, and we decided we had to change it up a little bit. We're gonna start today with the news that Oracle has called Force Majure on a new data center. Project in New Mexico. And I want to channel my like Ron Burgundy voice from Anchorman because boy, that escalated quickly. I mean, basically, Oracle is claiming that it isn't liable for costs or expenses if this project, I think it's called the Jupiter project, is delayed.
It's supposed to come online in 2028. And this story almost reads like a usual suspects lineup of the AI infrastructure play or you know theme. That we've seen, and especially a lot of the ones where the the thesis is a little bit shakier. I mean, we have a subsidiary of private capital company, Blue Owl is the developer. Obviously, private capital and developing has been a challenge one there. Uh, it is one of the big projects backed by OpenAI and Softbank. And additionally, on the energy side, it's the one project that has committed to using fuel cells. Which has been part of the thesis for Bloom Energy getting into the AI infrastructure trade. We've got a lot of things kind of p up in the air here.
This project was announced two years ago and wasn't expected to come online for a bit. Like all of these stocks are down today. Guys, what was your reaction to this? Because I found this one kind of alarming.
It makes total sense to me that Oracle would make this move. And here's why. Nobody is going to argue that Oracle isn't pushing the limits when it comes to extending itself to fund the data center infrastructure build out. It is absolutely extending itself. Now you can succeed even when you extend yourself, you just have to make sure that money coming in is going to cover the money going out, right? And when it comes to this data center in particular, there are reasons to think that maybe this doesn't come up when Oracle wants it to come up, when it expects it to, when it needs it to. The
Why is Oracle invoking force‑majeure two years before any payment is due?
tide of opinion, public opinion has turned violently against data centers. And I would say it's maybe even worse in left-leaning states such as New Mexico, where this particular project is. So there is real reason to say there might be delays from from regulatory bodies, from all sorts of things that could push back when Oracle is able to monetize this data center. So it makes sense to me that it would put this clause in place so it's not having to make payments before it is generating revenue. That doesn't necessarily mean that the project is doomed. It doesn't necessarily mean that Oracle is now in big trouble, but it does sh point to the fact that Oracle has extended itself and it really can't start making those payments before.
It is getting the job done there on the project.
Here we go, right? Tyler, exactly what you said that we have all of these companies that have been in the headlines. Uh, I think the most I I think John's right that like a lot of this is just technicality, like reserving rights. I do think it's fun, and we should talk about in a second, like why now, why this second? Because I I I want to speculate there. But look, I think this is really useful investor for investors, whether or not it's good news or bad news. John says that, you know, like But look, we're seeing moratoriums in Texas. We're seeing moratoriums all over the place. This is, we've been saying forever, this is going to come up. And there's been an open debate among pundits, among analysts, among lawyers about exactly what would happen, who's liable, how much liability, where it all falls.
I think it would be really useful for it to play out once. And so we could answer these questions instead of yell across the eye.
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Chapters
8 chapters
1
What is Oracle’s new force‑majeure claim on the New Mexico data‑center project?
0:02–2:26
2
Why is Oracle invoking force‑majeure two years before any payment is due?
2:26–6:36
3
How do Oracle’s ties to OpenAI and SoftBank influence this decision?
6:36–11:52
4
What could the force‑majeure clause mean for Oracle’s future cash flow and investors?
11:52–16:51
5
Are barriers to entry falling for fintech firms entering the U.S. market?
16:51–22:03
6
How should income‑focused investors evaluate Medtronic’s spin‑off of Mini‑Med?
22:03–25:03
7
What lessons can be drawn from past corporate spin‑offs and splits for today’s investors?
25:03–26:33
8
What are the biggest opportunities and risks for fintech companies in the emerging agentic economy?
26:33–26:45