This week, US President Donald Trump announced a joint venture between OpenAI, Japanese conglomerate SoftBank Group, and Abu Dhabi’s AI-focused sovereign wealth fund MGX, to build up to 5,000 units over multiple years in US data centers dedicated to artificial intelligence. Invested a billion dollars.
President Trump appeared at the White House along with OpenAI CEO Sam Altman, SoftBank Chairman Masayoshi Son, and Oracle founder Larry Ellison. Oracle is one of the technology partners in this joint initiative, called Stargate, along with Microsoft, ARM Holdings, and Nvidia.
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The funding is aimed at delivering a 500,000-square-foot “giant” data center and comes on top of major capital investments planned by the biggest technology companies.
According to Jackson Ader of KeyBanc Capital Markets Securities, one of the Wall Street analysts, “Capex of the major hyperscalers, namely Amazon, Alphabet, Microsoft, Oracle, Meta, and Alibaba, will be 2,865% in 2025. 308.8 billion in 2026, after making some adjustments to the consensus estimate. ”
With that in mind, Adar writes, “It depends on who else contributes to the project.” [Stargate]Additional investment is likely to be further curtailed. ”
While not all of this year’s nearly $300 billion will go to AI, the share of technology spending on AI is expected to increase. After all, AI is driving more and more cloud computing services, and a rack of Nvidia GPU chips for AI training and inference is one of the most expensive technology purchases.
But even if the initial $100 billion planned for Stargate is just a small addition to all planned spending, it still predicts significant AI spending for years to come. Still encouraging for Ader and others.
“Stargate fuels the narrative that we are in the early stages of ramping up the capital investment needed for AI, and the new administration is likely to be very supportive of the investment and energy requirements needed to transition to AI platforms.” ” wrote Sebastian, a Wall Street technology analyst. Mr. Nagy said in a letter to clients this week:
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Similarly, Wedbush Securities hardware analyst Matthew Bryson, who follows NVIDIA and other chipmakers, wrote in a note to clients that Stargate is “highlighting.”[s] The flow of capital invested in AI continues to grow seemingly endlessly. ”
Many questions remain regarding this initiative.
SoftBank’s Son will be responsible for assembling the initial $100 billion, but it is not yet clear where that money will come from.
Brad Zelnick, a high-tech analyst at investment bank Deutsche Bank, said in a note to clients that one of the big questions is “the ownership and financial structure of the new joint venture, the existing funding sources and amount of commitments, “Future financing plans and methods.” It would be accounted for in each company’s financial report. ”
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Others, including President Trump’s efficiencyist Elon Musk, have raised similar questions. On this week’s X, Musk tweeted that “they don’t have any money,” meaning the official $100 billion, to which OpenAI’s Altman responded, “That’s a mistake, you know it.” I objected.
AI critic Gary Marcus Considering substackwe call it “AI catfight”.
“Elon thinks he’s making the same moves that Sam used to play with,” he said, noting that the two founded OpenAI and made money, although they hadn’t made any money yet. When I was talking to people. “He might be right,” Marcus added, “neither of them are known for absolute candor.”
Deutsche Bank’s Zelnick asked further questions. How much of the new data center will be dedicated to AI training and how much will be dedicated to inference? How will Stargate benefit? Will that change the amount of capital Microsoft has to invest in OpenAI, and if so, will it change the amount of OpenAI revenue and profits that Redmond collects?
Zelnick is adamant about one thing: That said, the venture is a big win for Oracle’s Ellison in the race against cloud giants.
Also, OpenAI’s o3 is not yet an AGI, but it just did something that no other AI has done.
“This is a win for Oracle, if for no other reason than to further strengthen OCI. [Oracle Cloud Infrastructure] “The Future Relevance of AI,” Zelnick wrote.
“The more we learn, the more we understand the unique challenges of addressing the massive scale and performance demands of AI workloads, and we believe this announcement is further validation of OCI’s capabilities. “I am,” he wrote.
