Oracle’s $18 billion Stargate data center hits a legal snag

What went wrong

Force majeure is normally associated with events such as war, natural disasters or major social upheaval. Oracle is using the mechanism to shield itself from financial liability for delays tied to missing permits.

Financial analysts believe the notice may also be an attempt to avoid upcoming payments if the data center is not ready by 2028. That would turn a permitting problem into a financing problem for a project whose economics already appear under pressure.

If the New Mexico facility becomes operational, Oracle is expected to be its primary tenant, using 2.45 GW of AI computing capacity. It would be the first building in Project Jupiter, whose construction has already faced opposition from local residents and delays.

The power problem

In May, Oracle abandoned plans for a large gas-fired power plant intended to supply the site after developers failed to secure land-use permits from state and federal authorities.

The replacement is a solid-oxide fuel-cell system, or SOFC. Oracle has presented it as a temporary solution, but the technology has not been deployed at this scale.

The gap between the proposed system and the data center’s needs is substantial:

The largest SOFC installation currently known to exist is in South Korea, with a capacity of 80 MW. That is only a small fraction of the 2.45 GW required for the New Mexico site to reach its initially planned capacity.

A stress test for Stargate

Oracle is the main infrastructure company in Trump’s Stargate project. The private construction effort also includes:

Oracle was already under strain before the force-majeure notice. In January, lenders began questioning Project Jupiter’s financial prospects, prompting Oracle to dismiss thousands of employees as part of an emergency cost-cutting program.

Those measures do not appear to have stabilized the situation. Oracle now faces potentially serious financial consequences, while the project still has to resolve its power and permitting constraints.

My read is that the force-majeure notice is less a routine legal step than a signal about who may bear the cost if the schedule fails. The announcement is quiet about whether the missing permits can be secured, when construction can proceed, and how an experimental power system could scale from 80 MW to 2.45 GW.

That uncertainty extends beyond New Mexico. This data center is only the first facility in Project Jupiter, and Project Jupiter is only one part of the $500 billion Stargate buildout. Trouble at the first site does not prove the wider project will fail, but it makes the promised scale look increasingly dependent on solving basic infrastructure problems first.