A data center could have a tenant, a lender, and an equipment supplier all still taking part, but the investors can still discuss its value. The principal problem is the period between the start of construction and when the power supply is ready. Over that period, one contract may continue to be honored while another waits for the building to be ready for use.
A more detailed perspective can be taken of Oracle’s force majeure notice concerning Project Jupiter. While it might be claimed that the primary tenant intends to vacate, Reuters, quoting a source, gives an alternative account. It is reported that Oracle cannot terminate the lease, is still obliged to pay the project’s debt costs, and pays reduced rent while the project is under development. Higher rent commences when the campus is completed and, as the source states, will continue for the original term.
The terms mentioned are from a private agreement, not one we have examined ourselves; they do serve to make the notice more informative. Nevertheless, an AI contract can remain in effect even if investor returns vary over time.
What the notice actually changes
Reuters reports that approximately $3 billion of the project’s equity is held by Blue Owl. Our source says the equity yield at the development stage is about 9%, and it is expected to increase to around 11% once the project is completed and leveraged. The two yields might be based on different calculations, so it would not be correct to subtract them and refer to the difference as ‘lost rent’. The newspaper later added, based on a source, that the project could be postponed by a year.
Oracle states that Jupiter remains on schedule; Blue Owl maintains that the notice has no effect on its financial obligations. According to Bloomberg, Oracle would only be able to secure a possible three-year delay in rent if both parties agreed to a power-related force majeure event. A one-year delay in the project and a possible three-year contract remedy are not identical. As the reports do not refer to the same phase or milestone, we should not regard ‘on schedule’ and ‘one year late’ as applying to the same date without further information.
The notice doesn’t show that any relief has been granted or that there was a default on the project financing, but it does raise a significant question concerning large AI projects—namely, whether income increases when construction is completed, when power becomes available, or only when the customer accepts usable capacity? It can happen that one requirement is fulfilled while waiting for another.
The return from waiting
The method we use to determine whether a delayed project is a problem can be explained as follows. Let V represent the present value of the expected net cash flows to an investor under the original timetable. If the entire stream is shifted by one year, keeping the same term and level of risk, the investor will receive an additional amount of net development-stage cash equal to C at the end of that year after having paid for financing and holding costs. When an annual rate of return of r is assumed, the new value becomes (V + C) divided by (1 + r). This is based on the assumption that no additional capital is required.
The result will depend on the specific details; if C is less than r multiplied by V, then the delay will reduce the value. However, if the cash generated by the development covers the return required for waiting and the original operating term remains unchanged, merely waiting will not lead to a fall in value. This discussion is solely concerned with the timing of the cash flows and not with the Jupiter contract itself.
For example, where the future net operating distributions are worth $100 at the present time and the required return is 12 percent, a further year which brings $8 in net development distributions results in a new value of $108 divided by 1.12, that is $96.43; if the additional year yields $14, the new value is $114 divided by 1.12, or $101.79. In the first case, there is a loss of $3.57 while in the second there is a gain of $1.79. In both situations, the final operating stream remains unchanged.
The calculation has not taken into account any construction delays, changes in financing, tax implications, rising prices, counterparty risk, or any spending that might be delayed; in an actual project, these factors could affect the result. Moreover, the examples of $8 or $14 are not intended to convert Reuters’s reported 9% and 11% yields into dollar amounts, since we do not have the same-base cash flows or a full breakdown to perform such a conversion.
It is here that the common defense—”the rent is still owed, so no change has taken place”—breaks down. This argument supposes that the value of a dollar does not depend on when it arrives or on what must be financed during the delay period. Similarly, the other widespread claim—”the higher rent begins later, so the equity is reduced”—omits the development-stage payment and the retained operating term. The situation cannot be assessed from the headline alone; instead, we can identify the missing variables.
The three calendars behind four tickers
Begin by looking at $ORCL. Oracle could obtain some relief regarding the timing of when it must begin paying higher operating rent, even though it will still have to pay development rent and debt costs as previously reported. This situation is relevant only when Oracle starts receiving payments from its own customers. It is not necessary for the timing of the customer contracts to coincide with the landlord’s schedule.
The cash-flow statement that Oracle produced for the first quarter of fiscal 2027 illustrates the impact of timing on the entire company. It shows operating cash flow of $23.103 billion, with this figure comprising an $11.363 billion rise in deferred revenue due to customer prepayments, which have a substantial financing component. Capital spending amounted to $28.499 billion, resulting in negative free cash flow of $5.396 billion.
If the other cash items remained unchanged and only the rise in prepayments were eliminated, operating cash would have been $11.740 billion, and, with the same level of capital spending, the difference would have been- $16.759 billion. It should be stressed that this is merely a sensitivity analysis and not the actual or normalized free cash flow. The money tied up in prepayments is real cash and is subject to future delivery obligations. The report does not state how much of this relates to Jupiter. The main issue is how much future construction can be financed by customers on terms that are still viable should one campus open later.
Look at $OWL. As Reuters’ source states, the $3 billion figure refers to the project's equity, and Bloomberg indicates that funds managed by Blue Owl are providing this equity. The shares in the publicly listed manager do not directly reflect all of the gains or losses from each of the managed funds. To incorporate a Jupiter scenario into $OWL’s earnings, investors must be aware of the breakdown of fund capital, any principal capital reported on the company’s balance sheet, fee earnings, guarantees, and performance fees. Even if the company’s earnings estimate does not change by the same amount, a longer period of lower rent can affect fund returns.
Oracle has stated that it intends to use Bloom fuel cells as its on-site power source, with an installed capacity of up to 2.45 gigawatts. It must be understood, though, that the planned capacity does not represent the amount of power actually used or the amount of computing power provided. The fuel cells still require natural gas, as is confirmed by Oracle’s permit application. Investors should be made aware of the dates when the equipment is manufactured, delivered, accepted and paid for, as well as what will happen in the event that there are delays with the gas infrastructure. Placing an order and receiving steady short-term cash receipts are not the same thing.
$CRWV should be included in the comparison rather than in the Jupiter ownership chain. If competing sites take longer to open, existing computing capacity could become scarcer. A company that has development commitments and financing exposure elsewhere can also be affected by the same bottleneck. A delay at one campus is not a clear long or short signal for the entire peer group.
What would settle it
Our understanding would be revised in light of documents that illustrate the key milestones—specifically, the exact conditions under which operating rent would begin, what Oracle is owed during the development phase, whether costs or debt service can be passed on, and the protections suppliers have if the installation is delayed. The significant document could be a payment schedule or a completion certificate, not merely a press release announcing the total gigawatts.
Once power permits have been obtained, a funded gas connection has been secured, and a commissioning plan has been prepared in advance, delivery can be considered more certain. A binding agreement specifying the development payments and the original full operating term would help establish the argument that the contract will survive. Conversely, new equity injections, alterations to the return waterfall, or the failure to meet supplier milestones would make it more costly to wait. The private loan rates given early on, ranging from 89 to 91 cents, together with a later figure below 90 from Bloomberg, should prompt further investigation, not be taken as proof of a sale, a default, or an actual loss.
The demand is not the weakest aspect of this story. In its most recent quarter, Oracle reported $664 billion in remaining performance obligations and was delivering an additional 850 megawatts of data-center capacity across its business. These figures are substantial counterarguments to the notion that the entire construction has come to a halt. However, they do not indicate which party receives what while Jupiter waits.
This is the real investment question behind the term ‘force majeure.’ We need to know the timing of cash flows, who is responsible for each obligation, and what the return on capital is during the waiting period. A contract might guarantee the total number of rent payments, but it does not tell us if those payments provide a good return.