OpenAI and SoftBank's $100B Stargate Project Faces Setbacks Amid Tariff Concerns

OpenAI's Stargate project reportedly struggling to get off the ground, thanks to tariffs | TechCrunch

OpenAI's ambitious Stargate data center project is facing delays thanks to tariff-related economic uncertainty, reports Bloomberg. Growing market volatility and cheaper AI services have made banks, private equity investors, and asset managers wary of investing in Stargate, an OpenAI-led project that aims to raise up to $500 million for AI infrastructure in the U.S. and overseas. SoftBank, which in January said it would contribute significant capital to Stargate, has yet to develop a financing template or begin detailed discussions with potential backers, according to Bloomberg. Tariffs could greatly increase the cost of data center buildouts. Per an analysis by TD Cowen cited by Bloomberg, hiked prices for server racks, cooling systems, chips, and other components could contribute to overall build cost rises of 5-15% on average. Investors are also growing wary of an overcapacity spike. As Bloomberg notes, tech giants including Microsoft and Amazon have adjusted their data center strategies, in some cases pulling back on construction projects.

SoftBank Stargate Venture With OpenAI Hits Snags on Tariff Fears

SoftBank Group Corp.'s plans to invest $100 billion in artificial intelligence infrastructure in the US have slowed, with economic risks stemming from Washington's tariffs holding up financing talks. SoftBank founder Masayoshi Son and OpenAI co-founder Sam Altman unveiled the Stargate project in January with promises to begin deploying $100 billion "immediately" and raise that to around $500 billion over time. But more than three months later, SoftBank has yet to develop a project financing template or begin detailed discussions with banks, private equity investors and asset managers.

SoftBank's Stargate AI Investment Could Be Grounded by Tariff Worries | PYMNTS.com

SoftBank's lofty artificial intelligence ambitions are reportedly colliding with the harsh reality of tariffs. The Japanese conglomerate's plan to invest $100 billion in AI infrastructure in the United States has slowed, Bloomberg reported Monday (May 12), as risks related to White House tariffs have hindered financing discussions. Earlier this year, SoftBank and OpenAI embarked on the Stargate project, an AI infrastructure effort that could cost $500 billion over time. Months after that announcement, however, SoftBank still hasn't come up with a project financing template or held detailed discussions with banks, private equity investors and asset managers, the report said. While there have been preliminary talks with lenders and alternative asset managers, no deals have ensued because financiers are rethinking data centers amid increasing economic volatility and cheaper AI services, according to the report. The White House's trade policies have caused investors to shy away from riskier bets amid worries about a recession. Additionally, the appearance of AI models like China's DeepSeek has raised questions about the long-term profitability of OpenAI-linked projects, per the report. SoftBank did not respond to PYMNTS' request for comment. The news came as OpenAI is dealing with changes. This month, the company backed off plans to convert itself into a for-profit entity. The startup's restructuring effort still needs the endorsement of Microsoft, its biggest investor. This weekend also saw reports that the two companies are reworking their revenue-sharing agreement. The Stargate project is one of several AI data center efforts being developed by Big Tech firms. "AI data centers are fundamentally different because they require specialized hardware and infrastructure to handle the massive parallel processing needed for AI workloads," Deborah Perry Piscione, co-founder of Work3 Institute, an AI and Web3 advisory firm, told PYMNTS in January. "Traditional data centers focus on storage and basic compute, while AI facilities need dense configurations of GPUs and AI accelerators, like Nvidia's H100s, designed specifically for the complex matrix calculations that power AI models."

SoftBank, OpenAI's $100B investment delayed due to tariffs: report

SoftBank and OpenAI's plan to "immediately" invest $100 billion in artificial intelligence infrastructure in the US as part of the much-hyped Stargate project has faced months of delays due to fears that President Trump's tariffs could send costs soaring, according to a report. Masayoshi Son, the CEO of Japan-based Softbank, and OpenAI co-founder Sam Altman had promised during a White House briefing a day after Trump's inauguration to deploy $100 billion and raise that figure to $500 billion over the next four years. The two companies reportedly held early-stage talks with dozens of lenders and alternative asset managers, including Mizuho, JPMorgan, Apollo Global Management and Brookfield Asset Management. But there have not been any deals completed as steep tariffs and warnings of a recession have investors shying away from costly data center projects, sources familiar with the matter told Bloomberg. SoftBank and OpenAI did not immediately respond to The Post's requests for comment. The import taxes could hike costs to build data centers by 5% to 15%, according to TD Cowen analysis led by Michael Elias. Trump has touted Stargate as an example of an influx of US investments under his leadership. The project intends to build up to 20 massive data centers across the country. SoftBank, which is in charge of Stargate's financing, has built a team of 20 to 30 people to expedite the project, sources told Bloomberg. It is also backed by Oracle and MGX. However, China's DeepSeek AI model - which it claims took relatively little time and funding to get off the ground - has left Wall Street questioning whether multi-million dollar data center ventures are worth it. There has been some progress made on Stargate from plans made before SoftBank's involvement. Last week, Altman told a congressional hearing about his visit to the venture's first data center site in Abilene, Texas. It's being developed by Oracle and will become "the largest AI training facility in the world," Altman said. Altman and OpenAI are facing separate challenges, fending off legal threats from Elon Musk over the company's controversial plan to become a for-profit company. Musk, who co-founded OpenAI but later cut ties with the firm, has attempted to block OpenAI's restructuring bid. He even made an unsolicited $97.4 billion offer to take over the firm, which Altman quickly dismissed. Last week, OpenAI announced it was ditching its plans to turn the nonprofit into a for-profit entity.