Nothing creates a futuristic vibe like naming your project after a ‘90s sci-fi franchise.
Yesterday, President Trump announced a joint partnership between tech behemoths OpenAI, Oracle, and SoftBank to invest up to $500 billion in AI infrastructure across the US. Its name? Stargate.
“Put that name down in your books, because I think you’re going to hear a lot about it,” Trump said during the announcement.
Oracle jumped 6.75%, while US-traded shares of Softbank, the investment firm headquartered in Tokyo, popped 10.97%. OpenAI is a private company, but its partner and investor, Microsoft, rose 4.13%.
So, what exactly is Stargate?
- The venture will immediately pump $100 billion into building “the physical and virtual infrastructure to power the next generation of AI,” according to Trump. That figure could rise to a total investment of $500 billion over the next four years.
- Trump said the investments will create 100,000 new American jobs.
- Oracle founder Larry Ellison announced that the first of the project’s new data centers are already being constructed in Texas.
- A chief goal of the new venture is to compete with geopolitical rival China, which is building out its own AI infrastructure.
The entire market soared today, with semiconductor stocks in particular receiving a massive boost. Besides Oracle, companies like Nvidia and Arm Holdings were also named as technology partners in the deal. A data center buildout is especially beneficial for Nvidia, which will manufacture a good chunk of the hardware being used, which is partially why it reclaimed its title as the most valuable company in the world today.
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Server manufacturers like Dell and Super Micro Computer climbed, as did Vertiv, which makes cooling systems for data centers. It wasn’t just tech stocks, though—building materials companies and construction stocks like CRH also popped on the news, and several energy companies that will supply power for all these new datacenters rose as well.
And American stocks aren’t the only beneficiaries. Chinese firm Foxconn, which provides cloud computing equipment for Oracle, rose 1.28%. German firm Hochtief also jumped, given its subsidiary is a data center contractor.
Inner circle infighting: Ironically, one of the loudest critics of the project was Trump’s own “first buddy” and Tesla CEO Elon Musk, who questioned whether the project could really materialize. “They don't actually have the money,” he wrote on X last night. Musk’s xAI is a direct competitor to SoftBank and OpenAI, and Musk has also had a longtime rivalry with OpenAI CEO Sam Altman.
The massive project marks a stark departure from the Biden administration, which focused on implementing regulatory guidelines on AI in an effort to avoid another sci-fi franchise playing out: The Terminator. But now, for better or worse, the guardrails are off.—LB