The Stargate Project: $500 billion
"All of us look forward to continuing to build and develop AI—and in particular AGI—for the benefit of all of humanity."
Announcing The Stargate Project The Stargate Project is a new company which intends to invest $500 billion over the next four years building new AI infrastructure for OpenAI in the United States. We will begin deploying $100 billion immediately. This infrastructure will secure…
Here’s the breakdown of how this partnership will work:
- OpenAI will manage AI development (obviously).
- SoftBank (led by Masayoshi Son) will handle the money. MGX Ventures will also invest.
- NVIDIA will provide the chips.
- Oracle will help build and operate the system.
- Microsoft stays in the picture (OpenAI will keep using Azure).
- Arm is also involved as a tech partner.
The Stargate Project
"Stargate is a new company..." Will Stargate remain private? SoftBank (Japan) and MGX (UAE) are investors headquartered outside of the U.S. - however it seems obvious Stargate would be a U.S. company. The U.S. government has a vested interest in AI development and the project may receive direct government support in the future.
There is some tension between Microsoft and OpenAI. Microsoft hired Mustafa Suleyman, who co-founded DeepMind and Inflection AI. Microsoft is building its own frontier model called MAI-1—a, a direct competitor to OpenAI. Both Microsft and OpenAI do not want to be completely dependent on each other.
As of Project Stargate, Microsoft is no longer OpenAI’s exclusive cloud provider. It's likely given the participation of Oracle that Oracle Cloud would be the next provider. Microsoft made it clear they still get right of first refusal to any new OpenAI cloud needs, APIs, and IP… and of course, Microsoft wants its money back via their revenue sharing agreement.
Persective
A $500 billion project is a massive investment. To put this in perspective, consider the following:
- Comparable to building the entire U.S. Interstate Highway System (in real-dollar terms).
- More than double the cost of the entire Apollo Moon program, when adjusted for inflation.
- Over ten times as large as the Three Gorges Dam in China.
- 2x more than Meta, Apple, Amazon, Netflix, and Google's combined R&D spending in 2023.
- Just about equivalent to the entire GDP of the UAE.
- 4.5x the total AWS infrastructure investment in the U.S. from 2011–2022 ($108.96 billion)
Politics
Donald Trump touted the project in a live press conference with Sam Altman, Larry Ellison, and Masayoshi Son, Tuesday, January 21, 2025. All three credited Trump for helping to make the project possible, even though building has already started (data centers are already under construction with 10 being built so far).
While Trump has seized on similar announcements to show that his presidency is boosting the economy, there were already expectations of a massive buildout in data centers and electricity plants needed for the development of AI, even before Trump took office. The initial plans for Stargate go back to the Biden administration. Tech news outlet The Information first reported on the project in March 2024.
OpenAI has long relied on Microsoft data centers to build its AI systems, but it has increasingly signaled an interest in building its own data centers. However, the bottleneck in AI development has been the lack of electricity infrastructure to power the data centers.
The president indicated he would use emergency declarations to expedite the project’s development, particularly regarding energy infrastructure. The White House has put an emphasis on making it easier to build out new electricity generation in anticipation of AI’s expansion, knowing that the United States is in a competitive race against China to develop AI technology.
Risks
In a related action, in one of his first moves as president, Trump struck down Executive Order 14110, which aimed to ensure "Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence." Coincidence? AI development in the US is now largely unregulated at the national level and has just a patchwork of conflicting state laws. This move adopts the lack of regulation in China, although China has a national AI strategy and oversight.
- The next few years will determine how the AI arms race plays out. There won't be one winner in this AI race (Unless it's an AI superintelligence). Both China and the U.S. are going to have very advanced AI. Once one country has made a huge advance, others will match it. The limiting factors being the ability to generate enough power and the capital to build massive datacenters. The world needs its leaders to create a global AI framework, much like the world did with nuclear weapons.
- Unlike previous dramatic technology advancements (atomic weapons, space, the internet), AI development currently sits outside of government and security clearances, and in the hands of private companies with the power of nation-states.
- Failure to manage AI risks include an avalanche of misinformation and propaganda that makes democracy untenable. Note that recently Romania annulled its democratic election results due to AI-generated misinformation.
- At the very least AI may become a job-killer for the very people who elected Trump.
Economic Impact
“This infrastructure will secure American leadership in AI, create hundreds of thousands of American jobs, and generate massive economic benefit for the entire world. This project will not only support the re-industrialization of the United States but also provide a strategic capability to protect the national security of America and its allies.”
Setting aside the fact the lead investors are from Tokyo and the UAE; The Stargate Project represents a significant leap in AI infrastructure investment. There is no question the AI infrastructure buildout will create jobs in the U.S. and is necessary for the U.S. to remain competitive in AI. From 2011 to 2022 AWS estimated every $1 of their infrastructure spending generated an additional $0.84 in output for U.S. economy. The Stargate Project will also have a multiplier effect. In addition, AWS, Google, Apple, Microsoft, Anthropic, Meta, x.AI and other technology companies will have to increase their own investments to stay in scale race.
Interestingly, the first ten Stargate data centers are being built in Texas. Texas's power grid has long been separate from the two major national grids to avoid federal oversight, though it is still connected to other, smaller, national grids and Mexico. The Texas power grid has suffered from a lack of investment in infrastructure and has been the source of several major power outages in recent years.
In February 2021 three severe winter storms triggered the worst energy infrastructure failure in Texas state history, leading to shortages of water, food, and heat. More than 4.5 million homes and businesses were left without power and at least 246 people were killed directly or indirectly. The fact Texas has an independent power grid made it difficult for the state to import electricity from other states during the crisis.
If this project also drives the modernization of the US power grid this will be a huge boon to the economy. The U.S. power grid is in desperate need of modernization. Modernizing the U.S. power grid will create jobs, boost the economy, and make the U.S. more secure. However, if the Texas power grid remains separate from the national grids, it will not be nearly as beneficial for the U.S.
Fun Fact: The Stargate Project is not a new term. The US government ran project "Stargate", overseen by the CIA and other U.S. agencies, focused on exploring whether individuals with psychic abilities could gather intelligence or perform other useful tasks. The project ran from the 1970s to the 1990s before being declassified in 1995.