Stargate is simply a staggering power grab.
OpenAI CEO Sam Altman has spent the past year seeking an absurd amount of computing power to train the company’s AI models — 1 study says nipponese officials literally laughed at the amount of electricity he demanded. The stakes were clear: without massive computing resources, OpenAI risked losing ground to tech giants like Google and Meta, who’ve spent years building their AI infrastructure.
But last week, this impossible dream became a press release. Altman secured a mind-boggling $500 billion commitment to build OpenAI’s data center empire, called Stargate, thanks to backing from SoftBank, Oracle, and the Abu Dhabi fund MGX. The White home added its stamp of approval in a press conference, with president Donald Trump flanked by Altman, Oracle cofounder Larry Ellison, and SoftBank CEO Masayoshi Son. (The name references a 1994 sci-fi movie, where the stargate is an ancient transportation portal controlled by an all-powerful ruler.)
If it materializes, Stargate could effectively be the largest private computing infrastructure task in history. It would mean a network of massive computing complexes — each spanning hundreds of acres and consuming as much power as a tiny city. Each facility would draw enough electricity to power tens of thousands of homes, requiring its own electrical substations and transmission lines. It’s a bid not just for computing dominance, but for control of a crucial chunk of America’s energy infrastructure.
The deal relied on a fewer things happening in perfect order: Microsoft loosened its hold on OpenAI after Altman was briefly fired; Trump signaled to Silicon Valley elites that he was for sale; and tech’s biggest players started salivating at the chance to stamp their names on billion-dollar AI projects. It’s besides a testament to Altman’s dealmaking prowess: a progressive San Francisco tech leader walked into an administration that opposed everything he publically stood for, and within days, he secured a crown. He’s leveraging Trump’s desire for wins, SoftBank’s appetite for hype, and the AI arms race fear to safe unprecedented computing power for OpenAI alone, all within an intricate structure that makes it hard to track the money.
Despite all this, the foundations of Stargate look strikingly shaky. Altman’s getting a fraction of the money he initially sought from investors like SoftBank that have a reputation for putting hype above results. His announcement has been upstaged by a Chinese startup, DeepSeek, that quietly created an OpenAI-caliber model with a fraction of the resources. And any of the people who are usually eager to buy what Altman is selling are openly calling his bluff.
“We’ll request much more compute,” Altman reportedly told policymakers this week after DeepSeek blew a gap in Nvidia’s marketplace cap — yet raising skepticism about Stargate. “There is simply a very real competition in the world, and we’re very excited about the next step here.”
The numbers don’t add up
Despite being touted as a landmark Trump-era project, Stargate actually surfaced last year as a Microsoft-OpenAI plan for a massive data center. But that partnership frayed as Microsoft grew wary of its OpenAI dependence and OpenAI struggled with computing costs. So, Altman traded Microsoft’s deep pockets for a more complex web of backing partners.
OpenAI and Microsoft keep they haven’t broken up: “absolutely not!” Altman insisted on X, adding, “very crucial and immense partnership, for a long time to come. we just request moar compute.” Microsoft CEO Satya Nadella, for his part, told CNBC that this was an “adjustment” that Microsoft made “in order to support [Altman’s] needs while at the same time keeping the integrity of what we wanted as the strategical value” — corporate talk for reducing Microsoft’s risk. The drama has clearly gotten under Altman’s skin. He posted a grinning selfie with Nadella this week: their partnership is “gonna be much better than anyone is ready for.”
Either way, Microsoft either couldn’t or wouldn’t build the staggering infrastructure OpenAI wanted, and Altman took his pitch elsewhere. But skeptical observers noted that the numbers don’t add up. Stargate needs $100 billion in its first year alone, and its backers’ available cash seems to fall far short. SoftBank’s sitting on $30 billion in cash. MGX has a $100 billion fund but it’s already partially committed to OpenAI and may shortly include competitors like xAI, though it can supposedly tap more capital. Oracle’s got just $11 billion on hand.
Meanwhile, OpenAI — possibly the best-funded startup in past — is burning through cash like kindling. The startup expected to torch around $5 billion last year, after paying for major expenses like worker stock, according to financial papers reviewed by The fresh York Times. While Altman’s otherworldly dealmaking abilities may be able to scrape that first $100 billion together, it’s totally unclear how he’ll quintuple that.
On top of that, SoftBank has a complicated past with respect to its investing acumen — just look at the imagination Fund, which resulted in the company’s disastrous backing of WeWork.
“All I know is I’m good for my $80 billion.”
OpenAI and SoftBank will each commit $19 billion to Stargate, according to The Information. While they will be the largest backers, their exact ownership percent isn’t clear — Altman has described them as general partners (GPs), meaning they will have crucial control alternatively than simply an equity split. OpenAI and SoftBank are expected to hold a major stake and influence — reportedly around 40 percent each — with Oracle and MGX taking smaller positions. The full first investment from all partners is $45 billion.
The remainder is expected to come from outside investors and debt financing, which could yet trade like bonds. SoftBank is no alien to debt — it already carries $150 billion on its books. And Altman will likely tap the United arabian Emirates for additional capital. Even so, there’s a massive gap between $45 billion and $500 billion, and even the most aggressive capital raising efforts have limits.
For now, though, the numbers are weird — and White home “First Buddy” Elon Musk, who cofounded OpenAI but left after a power struggle, wasted no time shouting out what everyone else was whispering. “They don’t actually have the money,” Musk posted shortly after the announcement. “SoftBank has well under $10B secured. I have that on good authority.”
Altman bit back, replying that his post was “wrong, as you surely know” and boasting that Stargate’s first site is already underway. But that didn’t halt doubts from rippling through tech circles. In the CNBC interview, Nadella sidestepped questions about money, claiming he’s “not in the details” of investments in Stargate. erstwhile pressed about its funding, he only confirmed Microsoft’s yearly $80 billion Azure investment. “All I know is I’m good for my $80 billion,” he said with a chuckle. Arm CEO Rene Haas gave Stargate’s financial foundation a vote of confidence, calling its backing “quite solid.”
Musk is evidently not a neutral observer given his ongoing suit with OpenAI. And at this point, the conversation has devolved into a mix of petty sniping and bloviation. Trump brushed off questions regarding Musk’s backing concerns: “I don’t know if they do, but you know, they’re putting up the money. The government’s not putting up anything, they’re putting up money. They’re very rich people, so I hope they do,” he told reporters, adding that Musk “doesn’t like 1 of those people,” a mention to Altman.
None of this feels or looks right. OpenAI is bleeding billions annually despite its fast growth, and its compute costs keep ballooning, with no sign of a unchangeable business model in sight — it’s losing money even by charging customers $200 per month. At this burn rate, even the deepest pockets will yet run dry. That’s why critics are side-eyeing Son’s engagement — he’s an investor known for throwing cash at moonshot ideas only to yank the backing erstwhile reality catches up. possibly an investor like boy is Altman’s last resort. Just look at the latest headline: it was reported that OpenAI is looking to nab another $25 billion from SoftBank in a fresh backing circular that would value the startup at a jaw-dropping $340 billion.
As skepticism grows, we’re seeing increasingly grandiose promises, demonstrated in the Stargate announcement: AI-powered cancer vaccines designed in 48 hours, over 100,000 fresh American jobs, and US dominance in artificial intelligence. The venture aims to merge AI with biotechnology to revolutionize medical research, while simultaneously boosting American national security. The project’s stated mission is sweeping — to harness AI as a tool for human advancement. AGI is just around the corner, they’ll cure cancer, transform discipline — if investors just hand over a fewer more billion dollars.
“This is the beginning of a golden age,” boy said at the press conference.
$500 billion sounds massive, but it’s actually beautiful modest erstwhile you look at what Stargate is trying to do.
According to Kent Draper, who helps lead data center operator IREN, Stargate’s financial goals hold up in a best-case scenario. You can build quite a few data centers on its first-year budget of $100 billion. The problem is, there’s no warrant that money can be spent rapidly and efficiently.
Most existing data center facilities aren’t equipped for AI infrastructure, peculiarly its gargantuan power requirements. A average server rack — the kind that looks like a bookshelf full of computers — uses 5 to 10 kilowatts: as much electricity in a fewer hours as the average American home in a day. A modern AI GPU rack drawing 45 to 120 kilowatts can consume in a day what respective apartments or even an full tiny flat building might usage in a day. Current-generation facilities require at least 100 megawatts, and Draper estimates the next generation will require 200 kilowatts per rack, consuming as much electricity per day as dozens of homes.
You can’t just add more electricity here — older data centers simply “can’t handle that kind of power density,” Draper said. They deficiency both the electrical infrastructure to deliver that much power and the cooling systems needed to handle the intense heat these AI chips generate.
So Stargate will likely gotta retrofit existing sites or find fresh ones, a process that’s neither easy, fast, nor cheap. It’s hard to find adequate suitable locations to power large numbers of them up in 1 or 2 years, and the costs could vary significantly. “The numbers are beautiful widespread depending on how you build it,” Draper said.
A single Tier 3 (or standard) facility can cost about $10–15 million per megawatt to build, and even at the conservative end, that means $1 billion for the basic data center infrastructure. Add in the GPUs and another AI hardware and the cost balloons to “about $3.5 billion” for a single 100-megawatt facility. As he puts it, “the numbers add up beautiful quickly” — and this helps explain why Stargate’s budget targets are so massive.
Stargate is breaking ground with 10 data centers in Abilene, Texas — a location chosen likely for its untapped renewable energy potential, Draper said. Trump has pledged to fast-track construction through executive orders as the venture eyes expansion beyond Texas. While conventional data centers cluster in cities to minimize lag time for business software, AI facilities can prioritize power access over location, Draper added. (When the goal is to usage the compute for inference, though, spacing of the facilities is trickier.)
If Stargate doesn’t get its full $500 billion in funding, we’ll likely end up with a scaled-back version: less facilities, smaller builds, longer construction timeline, or a focus on circumstantial regions alternatively than nationwide deployment.
This would be far from the first imagination of creating adequate infrastructure to democratize access to AI computing power. alternatively of transforming the full industry, they’d just be patching the most urgent holes in the current system.
It’s easy to compare Stargate to the Foxconn project.
You may remember the promised $10 billion LCD factory, which was then scaled down dramatically well after Trump got a chance to do his public triumph lap. Most promised jobs never materialized, and the task mostly fizzled after the publicity.
It seems entirely plausible that Stargate will follow a acquainted pattern: grand announcements, media hype, then reality. The $500 billion figure will get walked back, backing will dry up, or the task will be quietly restructured into something much smaller. any data centers will most likely get built, but nowhere close the scale promised. Then again, that’s what discipline fiction is, right? A glimpse of the future that’s always just out of reach.
Even if Stargate secures its full $500 billion and builds out its massive AI infrastructure, there’s a more crucial question: what if natural computing power isn’t the way to AGI? “We request a fundamentally fresh learning paradigm,” argues Databricks AI VP Naveen Rao. “More compute alone won’t get us there.” His skepticism gained weight late erstwhile DeepSeek, a much smaller China-based AI lab, achieved o1-level performance allegedly utilizing far little computing power by focusing on more efficient training methods.
This raises an unsettling possibility: Stargate could win perfectly at building its network of power-hungry data centers, only to discover it’s betting on the incorrect horse. If better algorithms and smarter training methods — not brute-force computation — turn out to be the key to next-generation AI, we’re not just looking at a bubble. We’re looking at the biggest technological miscalculation in history: hundreds of billions spent on unnecessary infrastructure, creating a financial crater that could reshape tech investing for a generation.
As Sequoia, which invested in OpenAI, pointed out last year, AI’s fast advancement makes long-term data center bets precarious. Today’s cutting-edge clusters could be outdated long before they’re even full deployed. Yet, the AI infrastructure race isn’t about rational, long-term planning; it’s about survival. “Imagine you knew for certain that AI was going to be as transformational as the internet, and that you control the only AI company in the world. How fast would you build CapEx?” Sequoia partner David Cahn wrote. “I believe the answer is: You would take your time.”
That is, in short, the massive bet AI leaders are making right now. It isn’t totally stupid to bet on scale, though. The scaling hypothesis — the thought that if you make an AI bigger and feed it more data and computing power, it gets smarter — is mostly what has given us the best models we have today. quite a few this compute will be utilized for inference, too, so the models can handle millions of user requests simultaneously without crashing the chatbots. erstwhile we interviewed the ChatGPT team, the infrastructure lead said that “just keeping it up and moving is simply a very, very large feat.” Stargate would, in theory, aid a lot with that.
Silicon Valley operates on religion in visionaries
It besides helps with bragging rights. Mark Zuckerberg, Musk, and Altman are seemingly in a data center measuring contest, constantly one-upping each another through social media posts and press releases. Obtaining the biggest data center empire has become as stylish with the tech elite as the latest designer bag. It represents each leader’s ability to wield not just computing power, but industrial might — a flex that says they can reshape the physical planet as much as the digital one.
Silicon Valley operates on religion in visionaries, and Altman has masterfully cultivated that image. In front of cameras, Stargate’s investors are selling it as a way to cure diseases and solve large problems, but practically, it’s about OpenAI securing computing power to compete with rivals.
Paul Graham once wrote that if you dropped Altman on an island of cannibals, he’d return in 5 years as their king. Graham wasn’t talking about charm or genius; he was talking about pure adaptability and sheer endurance instincts. With Stargate, Altman has transformed again — this time into a uniquely American figure: part industrialist, part tech visionary, part techno-populist champion. He’s promising not just AI advancement, but American renewal through massive infrastructure and occupation creation, tapping into both Silicon Valley’s fears of falling behind and mediate America’s hunger for industrial revival.
And while the failure of a $500 billion moonshot wouldn’t precisely be a scarlet letter — tech forgives those, just look at Adam Neumann — it could puncture something bigger than Altman’s reputation. The AI sector has been moving on a potent mix of method promises and industrial ambitions. If Stargate fails, it wouldn’t just be another startup flameout. It would be a reality check for an full manufacture that’s been promising to reshape the planet through sheer computational force.
For now, Altman has written himself into a classical discipline fiction narrative: the visionary promising to transform society through technological might. But like many sci-fi stories, the most interesting question isn’t whether the technology works — it’s what happens erstwhile human ambition collides with physical reality. In six months or a year, we’ll know if Stargate was the beginning chapter of America’s AI revolution or just another techno-optimist fantasy that couldn’t last contact with the real world.
