Trump Announces 'Stargate,' The $500 Billion Project That Makes Investors Happy But Worries Elon Musk

21/01/2025

After a new president is inaugurated, several important events, tasks, and processes typically follow.

During the transition of power, Donald Trump who replaces Joe Biden as the President of the United States has made executive orders, briefings and updates, and more. And in the technology sector, Trump has unbanned TikTok, for example.

But that's just a start, because one of the next most notable announcement Trump made in this sector, is 'Stargate.'

One day after his inauguration, the day Mark Zuckerberg was caught peeking down Jeff Bezos's fiancée's cleavage, Trump announced Stargate during a press conference regarding the U.S. infrastructure investment, alongside OpenAI, SoftBank, Oracle, and MGX.

Stargate
(left-right) President Donald Trump speaks as Masayoshi Son, SoftBank Group CEO, Larry Ellison, chairman of Oracle Corporation and CTO, and Sam Altman, OpenAI CEO listen in the Roosevelt Room at the White House, on January 21, 2025, in Washington, D.C..

The companies announced their plans for this Stargate, a new company that will invest $500 billion in AI computing infrastructure across the U.S. over four years.

The announcement that came during a White House meeting with Trump, who called it the "largest AI infrastructure project in history."

The goal for this Stargate is to help kickstart building more data centers to expand computing capacity for existing and future AI projects, including OpenAI's goal of "AGI," which the company defines as a highly autonomous AI system that "outperforms humans at most economically valuable work."

"This infrastructure will secure American leadership in AI, create hundreds of thousands of American jobs, and generate massive economic benefit for the entire world," wrote OpenAI in a press statement.

"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."

The eyewatering $500 billion project is to be funded jointly by OpenAI, Oracle and Softbank, explained the president, flanked by the leaders of those companies: Sam Altman, Larry Ellison and Masayoshi Son, respectively.

Stargate
Stargate
Stargate

The partnership is geared towards building essential data centers and computing infrastructure for the development of artificial intelligence.

While the headline investment is substantial, some estimates had already indicated that developing AI would cost that much.

The project will start with a $100 billion investment to construct data centers and computing systems.

Oracle, for example, has begun building the first facility, a 1 million-square-foot data center in Texas. The companies expect Stargate to create 100,000 U.S. jobs.

As for SoftBank, the company will handle financial operations, while OpenAI manages technical operations.

While Altman is said to be the leader of this project, Son is slated to be the chair of the project.

The partnership that involves a huge sum of money, includes technology collaborations with Arm, Microsoft, and Nvidia.

And as for MGX, which is part of Abu Dhabi's push into AI investments, is backed by substantial sovereign wealth from the United Arab Emirates.

A representative from MGX was not present during the announcement.

The companies involved in Stargate have not publicly disclosed how they plan to contribute to the funds, but they don’t necessarily need the money in the bank to support it — they could raise debt or sign on other equity investors.

Like it or hate it, while other major tech moguls are certainly begrudging, knowing that their rivals get this enormous pledge directly from Trump, the most vocal is Elon Musk.

Shortly after Trump announced Stargate, Musk as Trump's "First Buddy” expressed his blatant disappointment.

"They don’t actually have the money," Musk wrote on his social media platform X. "SoftBank has well under $10B secured. I have that on good authority."

His statement is notable, since Musk has been one of Trump's innermost circle.

As a sign of how involved Musk is in the first days of Trump's administration, Musk said he was in the Oval Office when Trump signed a pardon for Ross William Ulbricht, founder of the dark web marketplace Silk Road. Musk had also dispatched a top staffer from his SpaceX and X companies to help ensure the release of convicted January 6 rioters after Trump signed a blanket pardon.

And here, Musk in going after Stargate shouldn't be a surprise, since the billionaire is in an ongoing lawsuit with OpenAI and its CEO Sam Altman, who was at the White House for the announcement.

Musk, who has said he "doesn’t trust" Altman, claims in the lawsuit the ChatGPT has abandoned its original nonprofit mission by reserving some of its most advanced AI technology for private customers.

Responding to Musk, Altman wrote "wrong, as you surely know. want to come visit the first site already under way? this is great for the country. i realize what is great for the country isn’t always what’s optimal for your companies, but in your new role i hope you’ll mostly put (America) first."

White House press secretary Karoline Leavitt also commented on Musk's statement, saying that "the American people should take President Trump and those CEOs’ words for it."

"President Trump is very excited about this infrastructure announcement in the field of AI, which is obviously growing, and something the United States of America needs to capitalize on, because our adversaries, such as China, are very advanced in this field," Leavitt said.

"So, the American people should take President Trump and those CEOs’ words for it -– these investments are coming to our great country, and American jobs are coming along with them."

Sources familiar with Stargate also said that Musk’s assertion is not true.

Elon
Elon Musk was always front and center during Donald Trump's presidential campaign. But in this project, he is like being off centered a bit.

Softbank, the sources pointed out, has $24.3 billion of cash on its balance sheet per its latest earnings, and is fine in taking more debt to make this project happen.

As for MGX, the Emirati investment firm specializing in artificial intelligence AI technologies, has $100 billion in capital commitments.

Oracle on the other hand, has $11 billion in cash on its balance sheet.

Lastly, OpenAI has announced that it has more than $10 billion from its recent round of venture capital.

Satya Nadella, CEO of Microsoft, which is working with OpenAI on Stargate, said that "all I know is I’m good for my $80 billion."

Her later responded to a clip of his interview shared by Musk on X, and said:

"And all this money is not about hyping AI, but is about building useful things for the real world!"

Later, when a reporter asked Trump whether Musk’s public criticism of the project upset him, Trump shrugged off the question.

"No, it doesn’t," Trump. "He hates one of the people in the deal."

The dispute over Stargate is just the latest chapter in a long-running feud between Elon Musk and Sam Altman, which dates back to their time as co-founders of OpenAI. The tensions began when Musk offered to take control of OpenAI, only for the company to reject his proposal. Following this, Musk left the organization in 2018, stating that he would pursue his own AI initiative.

The differences in their visions became increasingly evident as Musk, with his strong stance on the risks of AI, grew more concerned about the dangers of artificial general intelligence (AGI), which he considers an existential threat to humanity. Musk aimed to keep OpenAI focused on safety and open-source principles.

In contrast, Altman steered OpenAI toward practical, commercial applications, culminating in the controversial decision to transform the company from a nonprofit into a for-profit entity. This shift created significant friction, as Musk had envisioned OpenAI as a more altruistic organization.