The news: OpenAI, Oracle, SoftBank, and MGX announced a $500 billion AI infrastructure investment to build up to 20 data centers in the US over the next four years.

The investment, called Project Stargate, will provide a foundation for OpenAI’s expansion and could drive down AI adoption costs for US businesses and consumers once the data centers are operational. 

The first of the big AI deals: Stargate also provides the template for future AI, infrastructure, and venture-funding partnerships. Softbank-owned Arm, Microsoft, and Nvidia are participating in Stargate as technology partners.

• Stargate will be operated by OpenAI, which will use the AI infrastructure to create next-generation AI models.
• Financial management will be handled by Japan’s SoftBank, with CEO Masayoshi Son serving as chairman.
• Oracle’s first data centers are under construction in Abilene, Texas, with 10 buildings, each spanning 500,000 square feet. The project plans to expand to 20 buildings and other locations.

Why it’s worth watching: Stargate’s ambitious four-year timeline to completion could serve as the marker for competing AI, infrastructure, and investment businesses looking to cash in on AI expansion. 

While Texas is the beneficiary of Stargate, which has the potential to grow the local economy, other US states could be candidates for similar expansion. But there are barriers.

• An ambitious AI infrastructure plan like Stargate will require considerable energy resources estimated at 50 megawatts of electricity, which is enough to power thousands of homes. 
• The water supplies required to cool data centers will need to be addressed before any deal could be considered a success. 

Our take: We expect to see Big Tech continue to grow through deals and partnerships, especially under US-based AI expansion initiatives, which have the US government’s support.

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