Blue Owl Capital Stock Slides on Oracle Notice for AI Data Center Project

Shares of Blue Owl Capital (NYSE: OWL) declined in pre-market trading after its key tenant, Oracle, issued a force majeure notice concerning a massive AI data center development. The move introduces significant uncertainty around a project that investors have viewed as a core component of the alternative asset manager's growth strategy.

Oracle's Notice Rattles Investors

According to a report first published by Bloomberg, Oracle sent the notice to Blue Owl's subsidiary, Stack Infrastructure. The notice pertains to Project Jupiter, a planned 2.45-gigawatt AI data center campus in New Mexico, for which Oracle is the anchor tenant.

The legal notice signals Oracle's intent to potentially suspend lease payments if the facility is not operational by its 2028 deadline. While Oracle stated that the project remains on schedule and that it is not seeking to exit its lease, the action has raised concerns among investors and could complicate financing for the build-out, according to analysts.

Market Impact and Project Context

Blue Owl's stock slid 3.3% in pre-open trading following the news. The decline was exacerbated by a broader market downturn, with the S&P 500 and Nasdaq also trading lower. The stock was already trading significantly below its 52-week high of $18.00.

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Project Jupiter is part of the larger Stargate AI infrastructure initiative and has reportedly faced headwinds, including local opposition and permitting setbacks. The force majeure notice adds a layer of contractual and financial risk to these existing challenges, directly impacting the investment thesis for Blue Owl's data center pipeline.

Analyst Viewpoint

Despite the negative headline, some analysts maintained a constructive view. Devin Ryan of Citizens reiterated a Market Outperform rating and a $17.00 price target on Blue Owl's stock.

Ryan pointed to strong underlying momentum in the firm's other strategies, such as its net lease funds. One European net lease fund recently closed at a value 60% above its initial target. However, this positive commentary was not enough to offset investor anxiety stemming from the Oracle development.