Data centers may be risky, but AI will still win
ORCL•Oracle reportedly sent a force majeure notice to the developer of a large New Mexico data center project, and its shares fell more than 4% after the report. An investment manager said the project’s risks do not necessarily signal that a broader AI bubble is about to burst.
1. Oracle project raises concerns
Oracle reportedly sent a force majeure notice to the developer of a large data center project in New Mexico, a unit of Blue Owl, to protect itself from potential cost increases. Oracle shares fell more than 4% after the report.
2. Investor sees project-specific risks
Kim Forrest, chief investment officer at Bokeh Capital Partners, said the report highlighted risks in data center investments but was unlikely to signal that a broader AI bubble was about to burst. She noted that bonds aimed at funding the project had near-junk ratings, which she said should have warned investors it was risky.
3. AI outlook remains positive
Forrest said some planned data centers may never be built because of the developers involved, as well as demand. She said chip capacity is constrained for the foreseeable future and technology will work around this, adding that she thinks AI will win and a broader bubble burst is likely not to happen.
