Oracle's (ORCL -3.65%) ambitious plans to transform into a leading next-generation data center operator hit a snag on Friday, prompting many investors to sell the stock. Shares of the veteran tech company lost almost 4% of their value on a day when the S&P 500 index only slumped by 0.2%.
Power play
A natural gas pipeline project slated to supply power to an Oracle artificial intelligence (AI) data center complex in New Mexico will be delayed by six months. This was announced in a regulatory filing by the pipeline's operator, Energy Transfer subsidiary Transwestern Pipeline.
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In the document, Transwestern revised the in-service date of the Green Chile Project to Feb. 1, 2027. The original completion date was to be Aug. 15.
A steady and reliable gas supply is crucial for the operation of the massive facility, known as Project Jupiter, as the plan is for it to power fuel cells providing up to 2.5 gigawatts of electricity for the complex. Those fuel cells are to be supplied by Bloom Energy.
NYSE: ORCL
Key Data Points
Continued optimism
Energy Transfer and the state have been tussling over Green Chile; the latter has repeatedly denied approval of the pipeline's routing, as part of it goes through public land. Bloomberg quoted an unnamed Oracle spokesman as saying that "Project Jupiter remains on schedule, and we continue to work closely with our partners to move the project forward."
It's understandable that investors were skittish on the news, as Oracle -- which rarely manages its business halfway -- has its future riding on the transformation into an AI data center powerhouse.
That said, delays in pipeline projects aren't unusual, nor are disputes over routing. Since there's so much at stake with this one, I think the involved parties will find a way to complete it (although this might not be the last delay).
