OpenAI, SoftBank, and Oracle Partner on $500B Data Center Project

OpenAI Announces New AI Data Center Venture: Stargate

OpenAI is collaborating with SoftBank, Oracle, and other key players to establish a network of data centers within the United States specifically designed for artificial intelligence workloads.

Stargate Project Details

This collaborative effort, known as the Stargate Project, will commence with a substantial data center development in Texas, with plans for subsequent expansion across multiple states.

Initial investment is projected at $100 billion, with the potential to reach $500 billion over the next four years.

Economic and Strategic Impact

The companies involved anticipate the creation of “hundreds of thousands” of jobs through this initiative.

They also emphasize the project’s role in bolstering American leadership in the field of AI and safeguarding national security interests, alongside those of its allies.

Key Participants and Roles

The announcement was made at a press conference held at the White House, featuring President Donald Trump, SoftBank CEO Masayoshi Son, OpenAI CEO Sam Altman, and Oracle co-founder Larry Ellison.

Microsoft, Arm, and Nvidia are participating as technology partners.

MGX, a Middle East AI fund, will contribute to the investment alongside SoftBank, building on its prior investment in OpenAI.

Operational Responsibilities

SoftBank will assume financial responsibility for Stargate, while OpenAI will lead the operational aspects of the project.

Masayoshi Son will serve as the chairman of Stargate.

Oracle, Nvidia, and OpenAI will work in close coordination to construct and manage the computing infrastructure.

Future Chip Development

The new data centers may eventually house chips designed in-house by OpenAI.

The company is actively expanding its team of chip designers and engineers, collaborating with Broadcom and TSMC to develop a dedicated AI chip, potentially available as early as 2026.

Existing Partnerships and Investments

SoftBank is already an investor in OpenAI, having previously committed $500 million to the AI startup’s funding round and an additional $1.5 billion for a share tender offer.

Oracle currently provides AI computing resources to OpenAI under an existing agreement.

SoftBank had previously committed to investing $100 billion in the U.S. over a four-year period.

Initial Site and Expansion Plans

The first Stargate site will be located in Abilene, Texas, and is expected to require nearly a gigawatt of electricity by mid-2026.

The project, initially estimated to cost $3.4 billion, involves collaboration with data center startup Crusoe Energy.

OpenAI is currently evaluating additional locations across the country for future campuses.

By 2029, Stargate aims to scale up to 20 data center installations.

Data Center Scale

Each building within the Stargate campuses will encompass approximately 500,000 square feet.

Currently, 10 buildings are under construction.

Potential Connections to Other Projects

The relationship between Stargate and a previously reported $100 billion supercomputer project involving Microsoft and OpenAI remains unclear.

Earlier reports suggested a five-stage development plan culminating in Stargate, a 5-gigawatt facility.

Growing Demand for AI Infrastructure

Industry leaders have increasingly emphasized the need for increased investment in data center infrastructure to support the rapid growth of the AI sector.

AI systems necessitate substantial server capacity for both development and operational deployment.

Power Demand and Investment Estimates

Goldman Sachs estimates that AI will account for approximately 19% of data center power demand by 2028.

OpenAI has cited limited compute capacity as a factor in product delays, and this capacity has reportedly been a point of discussion with Microsoft.

Microsoft’s Commitment and Altman’s Perspective

Microsoft plans to invest $80 billion in AI data centers.

Sam Altman, CEO of OpenAI, has stressed the urgency of removing obstacles to building additional data center infrastructure in the U.S.

He highlighted the bureaucratic challenges associated with constructing power plants, data centers, and similar infrastructure projects.

Concerns Regarding Data Center Impacts

Critics have raised concerns about the potential for data centers to create fewer jobs than projected and to have significant environmental consequences.

Data centers are often water-intensive, potentially straining regions with limited water resources, and their energy demands can contribute to reliance on fossil fuels.

Continued Investment Trends

Despite these concerns, investment in data centers continues to rise.

A McKinsey report suggests that capital spending on data center mechanical and electrical systems could exceed $250 billion in the next five years.

Additional Investment Announcements

In January, Donald Trump announced a $20 billion investment in U.S. data centers from Hussain Sajwani, founder of DAMAC Properties.

Microsoft and BlackRock have also formed a partnership, the Global Artificial Intelligence Infrastructure Investment Partnership (GAIIP), to mobilize up to $100 billion for AI data center development.

MGX and Global Infrastructure Partners are also participating in GAIIP.