AI build-out contagion

Backstory

In late September 2026, Oracle sent a force majeure notice to the developer of Project Jupiter, a Stargate-class AI data-center campus near Santa Teresa, New Mexico. A force majeure clause is a contract term that lets a party excuse or defer obligations when events outside its control get in the way. Reporting says the notice preserves Oracle's right to defer rent for up to three years if the campus misses its online date because of power commitments. Oracle says the project remains on its planned schedule. Blue Owl, whose STACK Infrastructure unit is the developer and holds about $3 billion of equity, says its financial commitments are unchanged.

The campus is designed around about 2.45 GW (gigawatts, or billions of watts) of on-site Bloom Energy fuel cells, which turn natural gas into electricity. The Green Chile pipeline that would supply the gas has slipped to about 1 Feb 2027 after New Mexico State Land Office route denials. The air-quality permit for the fuel-cell plant has a state decision deadline of 23 Nov.

Reuters reports the notice chilled AI infrastructure financing talks, including SB Energy's Ohio campus deal, and SB Energy delayed its IPO the same week. S&P Global Ratings had already cut Oracle to its lowest investment-grade rating.

Where we stand

Numbers as of 12 Oct 2026.

The row tracks one chain. Build-outs get delayed, then the market reacts to the AI build getting harder, then the broad market drops because it leans so heavily on AI.

Step 1, Build. The Census Bureau puts US data-center construction spending at $7,535M in Aug 2026 (preliminary), up from $6,898M in July and the highest in two years. The low in that window was $3,287M in Sep 2024, so monthly spending has more than doubled.

Step 2, Chips. The SMH chip ETF, a fund that holds the large semiconductor companies, closed at $590.99 on 12 Oct 2026. That is 11.6% below its 22 Jun peak of $668.91, which puts it in a correction, the market term for a 10% fall from a peak, and 8.4 points short of a bear market.

Step 3, Market. The S&P 500 closed at 7,807.24 on 12 Oct, 0.1% below its 6 Oct peak of 7,818.93 and 9.9 points from a correction. The ten largest companies make up 40.51% of SPY, the main S&P 500 fund, as of 9 Oct.

Today only chips show strain. Building is still accelerating and the S&P 500 sits near its high.

What we're watching

• Census data-center construction spending stalling or falling after the Aug print.
• SMH closing below $535.13, its 20% bear-market line, or back above $602.02, its 10% correction line. A bear market is a fall of 20% or more from a peak.
• The S&P 500 closing below 7,037.04, which is 10% under its 6 Oct peak.
• 23 Nov: New Mexico's decision on the Project Jupiter fuel-cell air permit.
• 1 Feb 2027: the Green Chile pipeline in-service date.
• New force majeure or rent-deferral notices on other AI campuses, especially ones tied to power, gas, or permits.
• AI campus loans that fail to syndicate, meaning the lead lender cannot sell pieces to other investors, as happened with Blue Owl's roughly $4 billion Lancaster, Pennsylvania package earlier in 2026.
• Credit rating actions tied to AI spending by hyperscalers, the largest cloud companies.