US Government Unveils $500B Stargate Alliance to Lead US AI Infrastructure Push

US Govt Unveils $500B Stargate Alliance to Lead US AI Infrastructure Push

Analyst(s): Nick Patience
Publication Date: January 22, 2025

In a move touted as securing America’s AI future, the new Administration announced a $500B initiative called Stargate, backed by OpenAI, Oracle, and investors SoftBank and MGX. The joint venture is formed to build advanced data centers across Texas and beyond and comes with an initial $100B commitment. This collaboration brings together key technology partners including ARM, Microsoft, and NVIDIA.

What is Covered in this Article:

  • President Trump announced Stargate, a $500B AI infrastructure joint venture with initial $100B backing from Oracle, OpenAI, SoftBank, and MGX, focusing on building data centers in Texas with ARM, Microsoft, and NVIDIA as technology partners.
  • The project emphasizes national security and US-based AI infrastructure development, though funding includes international sources such as SoftBank (Japan) and MGX (UAE).
  • Notable absences from the partnership include major cloud players Amazon and Google, and other chip vendors including AMD and Intel, while Microsoft’s role runs alongside its existing tight partnership with OpenAI.
  • Healthcare emerged as a key focus, with OpenAI’s Sam Altman discussing AI’s potential for disease prevention and Oracle’s Larry Ellison making bold claims about AI enabling cancer vaccines and preventing future pandemics.
  • The announcement comes amid growing Chinese AI capabilities, exemplified by Deepseek’s recent launch of cost-effective models matching the performance of leading US AI systems.

The News: President Trump announced a new joint venture called Stargate to build AI infrastructure in the US with an eventual investment totalling $500B from the private sector over the next four years. Oracle, OpenAI, and SoftBank and MGX have committed an initial $100B to the project, which commences with the construction of data centers in Texas, some of which are already underway. Those data centers then will be filled with technology and Stargate’s technology partners have been named as ARM, Microsoft, and NVIDIA. OpenAI will have operational responsibility for Stargate with SoftBank in charge of the finances. Masayoshi Son, the chairman and CEO of SoftBank, will be Stargate’s chairman.

US Government Unveils $500B Stargate Alliance to Lead US AI Infrastructure Push

Analyst Take: The announcement, made at the White House at the end of the second day of President Trump’s second term, featured OpenAI’s CEO Sam Altman, Oracle’s founder and CTO Larry Ellison, and SoftBank’s Son. They spoke about the importance of building AI infrastructure in the US from a national security perspective, as well as making a statement with this level of investment. However, after the announcement, Elon Musk – who was not part of the announcement – said he believed SoftBank had only committed about $10B so far. It’s not clear how much each of OpenAI and Oracle have committed, though Oracle is already funding and building a datacenter in Abilene, Texas, which is now part of Stargate, it seems. Although this was private sector investment, with no commitment of the US government money, we anticipate involvement from the government in terms of ensuring there will be enough energy to supply these datacenters, among other things.

Who’s In and Who’s Not

Microsoft mentioned that it is a ‘partner’ in Stargate but doesn’t specify what that actually means. Instead, in a post on its website on January 21, it reiterated the close partnership it has with OpenAI, their contract that runs till 2030, and the fact that “The OpenAI API is exclusive to Azure, runs on Azure…” and that to further support OpenAI, “Microsoft has approved OpenAI’s ability to build additional capacity, primarily for research and training of models.” Quite what it means for Stargate is anyone’s guess at this point, though OpenAI is already working with Oracle to help it obtain more data center capacity.

Notably absent from the Stargate announcement – though their representatives were seated prominently at Trump’s inauguration – were Amazon and Google. Oracle is very much an upstart cloud player compared with the likes of AWS, Google Cloud, and Microsoft Azure and their level of annual capital expenditure is substantial. Microsoft recently committed to spending $80B during fiscal 2025 alone, so while Stargate is a big commitment, the hyperscalers are also building out capacity all around the world.

Also absent was Elon Musk and his various companies, though as he doesn’t own a datacenter operator or builder, or a chip or other infrastructure maker, that’s perhaps not so surprising. But he does own Tesla Energy, which provides solar energy generation systems and battery energy storage, as well as xAI, a would-be rival to OpenAI.

Funding & Healthcare

It’s quite a leap from a few tens of billions of dollars to $100B and then a much larger one to secure $500B, even if it is spread over four years. The inclusion of Japan’s SoftBank and MGX, based in Abu Dhabi in the United Arab Emirates (UAE) indicates that although Stargate is about building AI infrastructure on American soil, the funding can come from international sources as well. SoftBank has invested a lot in digital infrastructure around the world with varying degrees of success. And it should be noted that on December 16, 2024, Son announced – from President Trump’s Mar A Lago resort – that SoftBank was investing $100B in the US over the next four years so Stargate should be seen as part of that.

There was a noticeable healthcare slant to the announcements, when at one point Trump asked Altman about how AI could help prevent diseases and Altman said it could help cure diseases “at an unprecedented rate.” Afterward, speaking outside the White House, Ellison was even more bullish, claiming AI could enable vaccines to prevent cancer, and ensure we never have another pandemic such as COVID-19 again. It should be noted that Oracle owns Cerner, a leading electronic health records (EHR) software company and healthcare featured prominently in the company’s most recent earnings release.

China

With one of Stargate’s key stated functions to “provide a strategic capability to protect the national security of America and its allies,” it’s worth considering the announcement in the context of China. While China missed the initial explosion of interest in Generative AI after ChatGPT launched in November 2022, by mid-2023 the Chinese government had made large language models a research priority. Fast forward to Christmas Day 2024 and Deepseek, a Chinese company spun off from a hedge fund, launched its V3 model that performed as well as Anthropic’s Claude 3.5 Sonnet, but only cost $5.6Mn to train, 100 times less than Sonnet. And this week Deepseek launched R1, a reasoning model based on V3 that matched the performance of OpenAI’s o1 reasoning LLM in math, coding, and reasoning tasks but cost about 90% less to train. Alibaba Cloud also recently launched QWQ, which includes standards of Qwen With Questions, Qwen being the name of its LLM. QWQ performs better on some benchmarks than OpenAI’s o1.

In an interview at the Bloomberg House at the World Economic Forum in Davos this week, Alphabet CFO Ruth Porat said that although the US is currently leading in AI development overall, China is at par or ahead in certain aspects of AI and strategic intervention by the US is needed.

What to Watch:

  • It will be interesting to see if AWS or Google care to get involved and what impact, if any, Stargate has on Microsoft’s tight relationship with OpenAI.
  • We expect other infrastructure providers that make chips, servers storage, and networking to get involved as well as data center operators.
  • The gap between frontier models built and trained in the US and those in China has shrunk in terms of how often new and more performant models are released, though certain Chinese companies seem to be able to achieve it using a lot less compute resources.

See the announcement of the Stargate joint venture on the OpenAI website.

Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.

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Author Information

Nick is VP and Practice Lead for AI at The Futurum Group. Nick is a thought leader on the development, deployment and adoption of AI - an area he has been researching for 25 years. Prior to Futurum, Nick was a Managing Analyst with S&P Global Market Intelligence, with responsibility for 451 Research’s coverage of Data, AI, Analytics, Information Security and Risk. Nick became part of S&P Global through its 2019 acquisition of 451 Research, a pioneering analyst firm Nick co-founded in 1999. He is a sought-after speaker and advisor, known for his expertise in the drivers of AI adoption, industry use cases, and the infrastructure behind its development and deployment. Nick also spent three years as a product marketing lead at Recommind (now part of OpenText), a machine learning-driven eDiscovery software company. Nick is based in London.

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