Oracle Issues Force Majeure Amid $100 Billion AI Expansion

Oracle Corporation is investing nearly $100 billion in AI data centers, leading to significant financial strain and a negative free cash flow of $5.4 billion in the first quarter of fiscal 2027. The company reported revenue of $19.3 billion and a record revenue backlog of $664 billion, driven by more than $30 billion in new AI cloud contracts. To fund annual capital expenditures expected to reach $95 billion, Oracle has completed a $20 billion common-stock sale and plans to raise another $40 billion through debt and equity.

Execution risks have emerged at Project Jupiter, a New Mexico data center tied to a $300 billion agreement with OpenAI. The site faces regulatory setbacks and delays to the Green Chile Project pipeline, which has pushed its service date to February 2027. On September 24, Oracle issued a force majeure notice to the campus developer to protect itself against missing a 2028 target. Oracle stated that "the schedule hasn't changed and that these notices are routine."

These developments have triggered credit concerns, with loans for Project Jupiter recently trading below par at 89 to 91 cents on the dollar. Analysts have downgraded the company's stock to a sell, citing a heavy dependency on the OpenAI ecosystem, which accounts for approximately half of Oracle's remaining performance obligations, and rising component costs that may further increase spending.