Oracle freakout exposes fragile data center boom
ORCL•Oracle said it may invoke an Act-of-God clause to delay payments for a New Mexico data-center project expected to serve OpenAI. The project has up to $20 billion in loans, and higher financing costs could threaten its viability.
1. Oracle project dispute
Oracle said it may invoke an Act-of-God clause to delay payments for a data-center project under construction in southern New Mexico, expected to provide computing power to OpenAI in 2028. The Project Jupiter campus, being built by STACK Infrastructure, may require as much as 2.45 gigawatts of power, enough for nearly 2 million homes.
2. Financing concerns
The project is backed by private lender Blue Owl and as much as $20 billion in loans from banks including Goldman Sachs. Without an Oracle-backed lease, the project would not have received an investment-grade credit rating that enabled borrowing at around 6% a year ago. Financing costs of 8% or more could require larger commitments from OpenAI and Anthropic, undermining the project's viability.
3. Wider AI infrastructure
The column argues that if more technology companies waver on their commitments, forecasts that OpenAI, Anthropic and other AI companies could generate $400 billion in revenue by 2030 may look overly optimistic. It says the cost and complexity of building data centers may constrain the infrastructure investment needed to support expectations for AI.
