(Bloomberg) -- On the day after his inauguration, President Donald Trump announced a project to expand artificial intelligence infrastructure in the US, calling it the biggest buildout of its kind in history “by far.”
The plan, dubbed “Stargate,” comes with a price tag of $500 billion and will be led by ChatGPT developer OpenAI, investment firm SoftBank Group Corp. and software giant Oracle Corp. Its backers say it will create hundreds of thousands of jobs and help to keep the US ahead of China in AI development.
Skeptics observed that the launch was light on other details. It wasn’t clear how the funding would be secured for the mammoth undertaking, or how the partners would divide up responsibilities.
A few days later, Chinese firm DeepSeek shocked Silicon Valley with a new AI model that appeared to challenge two long-held assumptions: That Chinese companies were lagging a safe distance behind the US in AI, and that a future AI-driven world requires the kind of massive computing power offered by projects like Stargate.
What do we know about Stargate?
The Stargate partners said they aim to invest $500 billion over the next four years to build the physical infrastructure needed to train OpenAI’s models and process user queries. This will involve the construction of new data centers and physical campuses, starting with a site in Texas.
OpenAI will oversee Stargate’s operations, and SoftBank’s Chief Executive Officer Masayoshi Son will be chairman of the Stargate joint venture company.
While none of the parties involved have explained the Stargate branding, the most obvious reference is to the 1994 science-fiction film of the same name.
Is Stargate really anything new?
It’s unclear whether the initiative amounts to a meaningful departure from previous plans.
While it is positioned as a new venture, Stargate represents a continuation of deals and partnerships that OpenAI already struck with the two other companies. Oracle Chairman Larry Ellison has said some of the data centers being considered for Stargate were already under construction.
Despite the new name, Stargate will essentially serve the same aim as these prior investments — powering OpenAI’s services — just on a grander scale.
Why do AI companies need so many data centers?
Researchers have estimated that a single query through OpenAI’s ChatGPT chatbot requires almost 10 times as much electricity to process as a traditional Google search. That’s because the latest AI products are using large language models that aren’t just crawling an index, like a web search, but detecting patterns across billions of words of training material to generate a response on the fly.
To build these sophisticated AI systems, tech companies require the most advanced chips, larger data centers to house them and a mix of energy sources to power it all. Amazon.com Inc., Alphabet Inc.’s Google, Meta Platforms Inc. and Microsoft Corp. have each committed tens of billions of dollars to AI, much of it to build bigger data centers. The same week that Stargate was announced, Meta Chief Executive Officer Mark Zuckerberg said his company would spend as much as $65 billion on AI projects, including building a data center “so large that it would cover a significant part of Manhattan.”
How much money has actually been pledged for Stargate?
The companies said the venture would deploy $100 billion “immediately,” with a goal of eventually spending at least $500 billion. Where they will find that kind of money isn’t clear.
SoftBank is in talks to invest as much as $25 billion in OpenAI and has committed a further $15 billion to Stargate, a person familiar with the matter told Bloomberg in late January.
Kirk Boodry, an analyst with Astris Advisory, said he expects SoftBank to raise some of the money for Stargate by drawing in more partners, most likely from the Middle East, and could raise more through asset sales.
Bloomberg has reported that SoftBank might tap “hyperscalers” — a reference to the big US technology companies with a large data center footprint — via a project financing arrangement.
United Arab Emirates-based technology fund MGX has also been named as an equity funder for Stargate.
However, Elon Musk and Anthropic CEO Dario Amodei questioned whether the Stargate partners can deliver on the promised investments.
It’s “hard to make head or tail” of the venture, said Amodei in an interview with Bloomberg News shortly after the project was announced. “It’s not clear how much money is actually involved and how much of that was committed.”
What is the government’s involvement in Stargate?
Stargate culminates a months-long effort by OpenAI CEO Sam Altman to work with global investors and US regulators on developing AI infrastructure.
Although President Trump presided over the announcement, there are scant details on his administration’s role, if any. As far as the money goes, the president has said “the government is not putting up anything.”
Separately to the Stargate announcement, Trump has pledged to entice private-sector investment in the US by streamlining the permit process and loosening other regulations. His administration includes several tech-industry veterans, including Musk, a close adviser to the president, and David Sacks, Trump’s AI-crypto czar.
Is OpenAI partner Microsoft involved in Stargate?
The companies said Microsoft, OpenAI’s largest investor and a key supplier of its cloud and computing services, will serve as a “technology partner” for Stargate, along with Nvidia Corp. and Arm Holdings Plc. Microsoft and OpenAI will continue their existing partnership, with Microsoft having first right of refusal for supporting OpenAI’s technology needs. OpenAI said it would “continue to increase” its reliance on Microsoft’s Azure cloud platform as it develops future AI models.
What does the rise of DeepSeek mean for Stargate?
DeepSeek claimed that its model, called R1, could rival competing technology from OpenAI and Meta and was developed at a fraction of the cost. The implication is that future AI platforms might require less raw computing power than previously believed.
Some in the tech industry have questioned DeepSeek’s claims about how its technology works and how much it cost to build, but there is also some recognition that the company has developed notable new efficiencies to make do with its smaller stockpile of high-end computer chips.
In a closed-door meeting with US policymakers in late January, Altman made the case for continued investment in Stargate to support future AI breakthroughs. As tech companies build more sophisticated products, he said, “we’ll need much more compute,” both to improve the AI models and support growing usage.
--With assistance from Seth Fiegerman.
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