Oracle Calls Force Majeure Already?

In this episode of Motley Fool Hidden Gems Investing, Motley Fool contributors Tyler Crowe, Lou Whiteman, and Jon Quast discuss:

• Oracle is already preparing for delayed data centers.
• Is its commitment to OpenAI a reason behind it?
• Mailbag: How to handle spinoffs.
• Latin American and European fintechs are coming to America.
• Mailbag: European AI Infrastructure stocks?

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A full transcript is below.

This podcast was recorded on Sept. 24, 2026.

Tyler Crowe: Oracle is forcing the issue with AI. Welcome to Motley Fool Hidden Gems Investing. I'm your host, Tyler Crowe, and today, I'm joined by longtime Fool contributors, Lou Whiteman and Jon Quast. Guys, we had a plan for today, but using the term from one of our prior hosts, the news fairies showed up right before we recorded, and we decided we had to change it up a little bit. We're going to start today with the news that Oracle has called Force Majeure on a new data center project in New Mexico. I want to channel my Ron Burgundy voice from Anchorman ‘cause boy, that escalated quickly. Basically, Oracle is claiming that it isn’t liable for costs or expenses if this project, I think it’s called the Jupiter project, is delayed. It's supposed to come online in 2028, and this story almost reads like a usual suspects lineup of the infrastructure play or theme that we've seen, especially a lot of the ones where the thesis is a little bit shakier. We have a subsidiary of private capital company Blue Owl is the developer. Obviously, private capital and developing has been a challenge one there. It is one of the big projects backed by OpenAI and SoftBank, and additionally, on the energy side, it's the one project that has committed to using fuel cells, which has been part of the thesis for Bloom Energy getting into the AI infrastructure trade. We've got a lot of things up in the air here. This project was announced two years ago and wasn't expected to come online for a bit. All of these stocks are down to date. Guys, what was your reaction to this? Because I found this one alarming.

Jon Quast: It makes total sense to me that Oracle would make this move, and here's why. Nobody is going to argue that Oracle isn't pushing the limits when it comes to extending itself to fund the data center infrastructure build-out. It is absolutely extending itself. Now, you can succeed even when you extend yourself; you have to make sure that money coming in is going to cover the money going out. When it comes to this data center in particular, there are reasons to think that maybe this doesn't come up when Oracle wants it to come up, when it expects it to, when it needs it to. The tide of opinion, public opinion, has turned violently against data centers. I would say it's maybe even worse in left-leaning states such as New Mexico, where this particular project is. There is real reason to say there might be delays from regulatory bodies, from all things that could push back when Oracle is able to monetize this data center. It makes sense to me that it would put this clause in place so it's not having to make payments before it is generating revenue. That doesn't necessarily mean that the project is doomed. It doesn't necessarily mean that Oracle is now in big trouble, but it does point to the fact that Oracle has extended itself, and it really can't start making those payments before it is getting the job done there on the project.

Lou Whiteman: Here we go, Tyler, exactly what you said, that we have all of these companies that have been in the headlines. I think Jon's right that a lot of this is technicality, reserving rights. I do think it's fun, and we should talk about it in a second: why now? Why this second? Because I want to speculate there. But look, I think this is really useful for investors, whether or not it's good news or bad news. Jon says, left-leaning states, but we're seeing moratoriums in Texas. We're seeing moratoriums all over the place. We've been saying forever this is going to come up. There's been an open debate among pundits, among analysts, among lawyers about exactly what would happen, who's liable, how much liability, where it all falls. I think it would be really useful for it to play out once. We could answer these questions instead of yelling across the aisle at each other, so bring it on. If Oracle is successful in this, it takes pressure off Oracle and maybe some of the other ones that are making commitments; maybe it means more commitments. It might mean people are more aggressive because they can go further onto thin ice and be safe. If they get slapped here, it could at least cause a rethinking. If they do walk away, can Blue Owl backfill we get a test on demand? There are so many questions that have been out there, as hypotheticals or as stuff for people like us to argue about without anybody knowing that maybe if this plays out, we'll start to get answers too. As an investor, that's clarity over time.

Tyler Crowe: I've got a couple of questions here, and one of them, I may actually have to put on a conspiratorial tin hat, and you may have to walk me off the ledge here a little bit. But here are some of the reactions I immediately thought of when I saw this: No. 1: Oracle's calling Force Majeure two years before they even have to make a payment on anything. That was, in some sense, to me, alarming. Coming from oil and gas, when I hear Force Majeure, it's like something bad happened right now, and I can't deliver on a contract like three months from now; two years is a long development time. The fact that they're already calling this is somewhat questionable because I think we have been talking about this development; Oracle has been, as we've said, one of the shakier ones. It's been using off-balance-sheet deals to get it done, taking on a lot more debt relative to the Alphabets, the Amazons, the worlds to do it. As quickly call Force Majeure, I found fascinating and also a little bit on the competitive position here. Here's my conspiratorial thought; you can walk me off the ledge here, but Oracle has been doing a lot of these deals with OpenAI, where it's like, OpenAI, they take an investment in OpenAI. We've talked about these circular financings, and now all of a sudden, all of these AI companies are delaying their IPOs for safety reasons. Or they're saying safety reasons. We've seen a lot of stories coming out about obvious safety questions. Part of me is saying maybe Oracle's doing this because they know they are going to struggle to get paid from the people that they said they got the commitments from.

Lou Whiteman: I think that's interesting. I think that my conspiracy theory on these safety things is that these companies pre-IPO want to focus on revenue and not the science project, and that would mean maybe not the frontier models getting all of the attention and so less compute needed. It's hard to say, but I think that's possible. I said why then and why now. I think are very interesting questions. I think the why them versus, I don't know, Alphabet or someone else that's doing this is because, as we know, Oracle is starting from a weaker foundation. They do have thinner ice here, not that it's too thin, not that they're going to fall, but they do have less resources to back this up. The why now fascinates me because you're right: I could be that, or it could be that either Oracle is taking questions on this based on what they've already borrowed and some of their creditors are asking questions, or it could mean they want to do more deals and the threat of this or the liability attached here is holding things back. The big takeaway: we don't know. A lot of it is speculation, but the big takeaway here is, I guess, what we already knew is that Oracle isn't coming from a position of strength, period.

Jon Quast: I'll meet you halfway, Tyler. When you think about where everything is going, it's undeniable that the long tail is still in place. We are reimagining the entire infrastructure of the Internet, and I don't think that anything stops this train. But everything is so fast-changing that who is leading? How are they leading? What are the compute requirements to do that? It changes so quickly that anything is up for debate, and whether or not OpenAI, specifically, is saying, oh, we're needing to rethink some things here with our situation with Oracle. That is a valid question to be asking and wondering if that conversation isn't happening in another room.

Tyler Crowe: All I'll say is, if there's one thing that can stop this train, it's been very good at stopping trains in the United States, it's litigation in court. I think we have a fascinating story coming up here. We'll get a little bit back more on schedule coming up after the break.

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Tyler Crowe: Now, normally, we do a listener question at the end of the show, but today we got a pretty meaty question here, so I wanted to give us a little bit of extra time to discuss it. Remember, if you have a question, go ahead and email us at podcast at fool.com. That's podcast with an S. We've also got the email in the show description, cause you need it there. Today's question comes in from Zack, and guys, I'm going to split it up because, like I said, meaty question, several questions, and I thought it was worth diving into. Hi, Motley Fool team, longtime listener and love the show. With Medtronic recently launching a voluntary exchange offer to separate its diabetes business, MiniMed, I have been thinking about how everyday investors should evaluate these types of corporate actions. Since you provide great high-level educational perspectives in the mailbag. Thanks, Zack. Could you break down how splits and exchange offers work? We'll start with the first question that he wants specifically. The dividend investor dilemma: how should income-focused investors weigh keeping an established dividend payer versus swapping for a fast-growing, non-dividend peer play, even with a built-in incentive? In this case, for the Medtronic MiniMed thing, there's a 7% valuation discount that you get as an investor as part of the spinoff. Guys, a dividend investor getting a non-dividend stock in an exchange. How does this work? What are your thoughts?

Jon Quast: There's a reason why we don't give personalized investing advice on this show. It's not covering our back end. It literally is because so much of investing is personal, and you would need to know somebody's personal situation so intimately, and we don't speak to individual situations. It's very relevant for this question. The debate between dividend income and growth, revenue growth specifically. I would say that on paper, it makes sense to go with growth. Boston Consulting Group did a long study over 20-year rolling periods, I believe it was, or maybe it was 10-year rolling periods, showing that among the top quartile of best-performing stocks, growth was the biggest contributing factor to the gains. On paper, that, to me, points to: I want to maximize my portfolio for growth because that's going to outweigh the boost that dividends provide. However, real-life investing doesn't take place on paper. It takes place in the real world where I have real concerns, I have emotions, and I have things that I want to see in my portfolio. Maybe people don't want to have the volatility that comes with growth, and that is part and parcel to that method of investing. It really depends on the situation. I think that having a stack of consistent dividend-paying stocks makes sense in a diversified portfolio. I also see the rationale in saying, I'm going to trade out this dividend payer for a better growth opportunity. I think either can make sense depending on your situation.

Lou Whiteman: I think Zack tipped the scales for me in how he worded the question because he said, how should an income-focused investor? Again, I don't know, Zack. I can tell you, though, how I would think about this. If I bought Medtronic for the dividend, if I'm focused on income, I'm probably keeping the income, and I'm going to be more swayed by keeping Medtronic and keeping the dividend. The great thing about this, and he asks also how do split and exchanges work. It's basically tax-free. Sometimes you get both; sometimes you got to choose one or the other, in this case, but it's a tax-free carving up at the company. Here's the great thing: you can have both. You can keep your Medtronic and buy the other company, MiniMed, buy shares for the same tax implications if you want. You don't have to choose. Your choice would be you have to commit new capital. But if you are an income-focused investor and that's the reason you bought a dividend stock, I think if it was me, I'd probably lean towards keeping the dividend stock. If you're focused on growth and you bought Medtronic because you were excited about the growth, then probably the dividend means less to you, and maybe you look at the other one.

Tyler Crowe: Here's the second part of the question, and I'm going to try to make it a little bit more general because Zack's question is a little bit focused on the healthcare part, but in terms of your portfolio strategy, what does it signal when an established giant company divests a smaller unit that, as a result, it drives up top-line revenue but makes for lower margins. It can go in a lot of different directions here, and I'll let you guys go, and then I'll finish up.

Lou Whiteman: The first thing that comes to mind, I think, with any split or anytime a company breaks itself in two, there is, if you think about it, a war for capital inside any company with multiple divisions. Not everybody gets the same amount of capital; the parent, the CEO, only has so much allowance to give to its subsidiaries, and they're fighting for it. In general, in theory, why splits work is that competition goes away. Both companies, in this case, you have a maybe slower growth and a faster growth. They can allocate capital towards the needs of their specific business. That is the bull case for splits in general. Whether or not it's a good idea, bad idea, I think that's an individual case-by-case thing. I will say, in this case, a huge flag is that they are offering a premium for investors to take Medtronic. They are offering that Zack mentioned, a 7% valuation discount. Now, it could be because Medtronic is a dividend player. They think their investment base is less interested in growth, so they're trying to even the playing field that way with their target audience, or it could be a signal that the market is probably favoring Medtronic. It's hard to give one-size-fits-all answers here, but I do think you have to read the individual situation and figure out what are the signals telling? If I'm playing poker with Medtronic here, what is the tell here? What are they telling me that they're not telling me that I can use to make a decision?

Jon Quast: I like this move as far as splitting out MiniMed from Medtronic. I think it was a good move. When you talk about the difference in the growth rates, it's not that different. I mean MiniMed is better, but it's not drastically in another category of growth level. It's mid-single digits and high single digits. It's not that huge of a difference, but the profit margin difference is quite significant. It does make sense to me for Medtronic to spin out MiniMed and then be able to dedicate its own capital to growing its higher-margin business. That, to me, is going to potentially grow profits faster at Medtronic than what the profits are going to grow at MiniMed. It makes a lot of sense to me that it would make this move, but stop me if you've heard this one before; if we're taking broad takeaways here, every deal is different. Everything is unique, and so each one does need to be examined on the merits. There are times in the past where I thought that a business made a mistake to split up a company, make a corporate move like that, and there are other times that it was clearly the right move. I would say, do your best to see what is motivating it. Is it a good business decision? Can you see the business rationale, or does it feel like we're trying to rally the shareholder troops or something and make it seem like we're doing something when really both ships are going down?

Tyler Crowe: To speak more generally to it, and I think you guys would likely all agree with this is sometimes the consensus thesis is wrong, and perhaps your own thesis is wrong as well. We've seen plenty of cases where we've had splits or divestitures or spinoffs or something like that, and the market consensus was, oh, this was the great part, and you're left with the duds, and what ended up happening was that theoretical dud ended up doing much better. I think the General Electric split was a great example. Everyone thought that GE Healthcare was the cash-generating crown jewel that got split off. It's true; it generated a lot of cash. But they thought GE Vernova was going to be the problem child. We look, since the split, GE Vernova has been, by far, the greatest performer out of all of those, in large part because of shifting dynamics and whatnot. But whatever your initial thoughts may be with a lot of these spin-offs, reserve the right that it could change. Coming up after the break, we're going to talk about fintech and the changing landscape there.

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Tyler Crowe: We're actually going to start today's show with this news story, but with the Oracle news, we thought we needed to stop there. This particular story here, I think, goes under the category. Be careful what you ask for, because we've seen a lot of fintech companies going public recently, doing actually relatively well, and a lot of them have been arguing against regulations in the banking industry because they're protecting the entrenched interests. They've gotten what they've asked for with more lax regulations as of late, and as a result, we're going to see some very large competition coming into the space. Latin American fintech company Nubank and European fintech giant Revolut. These are companies that are much larger than a lot of the fintech companies we see in the United States today. They are actually looking to get banking charters and looking to come to the United States, in large part because the United States banking industry is so much larger than in their current markets, and they see it as an opportunity for growth despite all of the entrants in the market already in the United States. Guys, when I read this report, the immediate thing that I said was, wow, the barriers to entry in this industry mustn't be as much as some of the bulls in the fintech business thought it was. What does this say about the industry?

Lou Whiteman: I'll tell you, this is confirmation bias for me. I go back to the 1990s when I had to sit through the Stonier School of Banking, and I remember something stayed with me and guides me here: is that really all this industry is doing, is buying and selling money and trying to make money that way. Almost all innovation in this space is marketing, and that's why I've avoided the fintech because I think this is another reminder of how easy it is to compete here. There are 8,000 banks and credit unions in this country. There are over 500, maybe close to 1,000, online-only. There's nothing special about any of these things. At the end of the day, banking is a simple business anyone can grab share with either strong marketing or aggressive pricing and hold your valuations accordingly.

Jon Quast: Why does Nubank and Revolut want to come to the U.S.? The answer is: why wouldn't they want to? This is a huge market, and the opportunity right now, with people in charge of the federal banking area saying the USA is now open for business, unlike how it has been in the past. This is the window. They're saying this is a huge market opportunity, and regulatory environment is such that we're going to be able to waltz in to lose point; what they do with it from there is really how they run the campaigns. It's not like this is a growing space necessarily; the U.S. market is very saturated. Can you take share with good optics? I think that you can. There might be a little bit of an opportunity here. I think that the bigger issue with fintech right now is not necessarily the barriers to entry. It is more the shifting dynamics. I do think that the agentic economy, to go back to what we were saying earlier, nothing stops this train. I think that nothing stops the agentic layer that is being built right now. We're seeing it happen where I'm telling my AI agent to do certain transactions on my behalf. I think that it's only going to get more profound, and what does that do to your fintech layer of the Internet?

I think that things get different really fast. I think that this points to companies that have a network effect that we're saying, hey, this is why we have an advantage here, such as Block's Cash App. I think that is one that might be challenged in this environment, this growing agentic economy. I think that it points to the physical point-of-sale device, perhaps being a little bit of a moat in some ways because the agentic commerce angle does not impact what I do at a stadium when I buy a hot dog. That's still going to be a physical transaction. A physical point-of-sale device where those companies are able to have a take rate, that seems a little bit more durable to me. I think your Shift4 payments, I think that your Toast. I think those are layers that are able to endure a little bit, but I think that some of your pure-play Internet Fintech, those may see their margins start to contract.

Tyler Crowe: Lou, as we finish out here, Revolut it's still privately traded. I think it's about a $120 billion valuation on the private markets. It's looking at doing an IPO, perhaps in a dual listing U.S., London sometime in 2027, 2028. With that in mind, Jon highlighted some of the companies he sees as benefitors of this specific trend or the lack of competition. Are there any companies that you see that are beneficiaries of this more lax regulation or the shifting sands, I guess, if you will, in the fintech?

Lou Whiteman: The issue I have with all of this is that I don't think that there is innovation that really makes consumers' lives better. There is temporary pricing power. We saw SoFi for all of its success, and SoFi has been a great success in growing its customer list. They've done that at the expense of cross-selling, so profitability, and also they've done it with irrational pricing or less rational pricing. There is a yang for every yang. I don't think that for all the rhetoric, we're bringing new people in. I don't think things are shifting that much. If there is opportunity, and this is the most boring way to look at it though, I think you're going to see a lot of credit unions convert the banks and become stocks, and those are some of the small caps that I think are tomorrow's big winners. That's where I'm looking here. As for fintech, it is a commodity; even Toast things someday can be whittled away to a commodity. Be aware. They can be good businesses, but pay an appropriate valuation for these things.

Tyler Crowe: Lou, thrift conversions to stocks from credit unions sounds like the most Lou thing imaginable for this.

Lou Whiteman: There's a lot of money to be made, Tyler.

Tyler Crowe: That's all the time we have for today. As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against. Don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provide for informational purposes only. To see our Fool advertising disclosure, please check out our show notes. Thanks to our producer Dan Boyd and the rest of the Motley Fool team. For Jon, Lou, and myself, thanks for listening, and we'll chat again soon.

Jon Quast has positions in Shift4 Payments and Toast. Lou Whiteman has no position in any of the stocks mentioned. Tyler Crowe has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Block, Bloom Energy, GE HealthCare Technologies, GE Vernova, Medtronic, Oracle, Shift4 Payments, and Toast. The Motley Fool recommends the following options: long January 2028 $15 calls on Toast. The Motley Fool has a disclosure policy.