Project Stargate: $500 Billion AI Infrastructure Initiative Sparks Tech Industry Boom

3 Potential AI Stock Winners From the $500 Billion Stargate Project | The Motley Fool

If there were any fears that spending on artificial intelligence (AI) infrastructure was about to slow down, that was put to rest when President Donald Trump announced the new Stargate AI project last week. Backed by OpenAI, Oracle (ORCL -13.79%), and Japan's Softbank, the consortium plans to spend $500 billion over the next four years building out data centers to help handle the growing AI workload. The consortium plans to initially construct 10 data centers and then expand to 20. Oracle Chairman Larry Ellison said data center construction was already underway, with the first set to be built in Abilene, Texas. Softbank is the main financial backer, with $100 billion set to be deployed immediately. The project announcement said Oracle, Nvidia (NVDA -16.97%), and OpenAI would collaborate to build and operate the venture's computing system, while OpenAI would be responsible for overseeing the venture's operations. With such a huge project underway, let's look at three potential AI winners from this venture. Nvidia will undoubtedly be the biggest winner of the Stargate project. The company will be involved in building the data centers' computing systems, which will no doubt consist of a whole lot of Nvidia's graphic processing units (GPUs). With a 90% market share in the GPU space and a major role in the project, it will likely be the only supplier of GPUs for these data centers. In the past, when Microsoft has talked about its capex (capital expenditures) spending on AI, it has said that about half goes toward assets with long practical lives (the land and buildings, for example), while the other half goes toward GPU and CPU (central processing unit) servers. As such, this indicates that a lot of this project's costs will be directed toward Nvidia's GPUs. Stargate could also spur further AI data center investments for other large tech companies. Microsoft, which is Nvidia's largest customer, already announced it would spend $80 billion on AI data centers, while Meta Platforms just announced it would spend $65 billion on AI infrastructure this year. The AI race is heating up, and Nvidia looks like the biggest beneficiary. Meanwhile, the stock remains reasonably valued, trading at a forward price-to-earnings (P/E) ratio of only about 32.5 based on 2025 analyst estimates and a price/earnings-to-growth ratio (PEG) of 1. A PEG under 1 is generally considered undervalued, but growth stocks often command PEGs well above 1. With Oracle as part of the consortium behind Stargate, the company is looking to elevate itself in the cloud computing space. It's a distant fifth in cloud computing market share, with only 3%. It's behind the big three cloud computing companies -- Amazon (31% market share), Microsoft (20%), and Alphabet (12%) -- and trails China's Alibaba (4%) as well. Nonetheless, Oracle has been seeing strong growth in the cloud computing space. Last quarter, its cloud revenue jumped 24% year over year to $5.9 billion, with cloud infrastructure revenue surging 52% to $2.4 billion and cloud application revenue increasing 10% to $3.5 billion. Its Oracle Cloud Infrastructure (OCI) consumption revenue soared by 52%, while GPU consumption skyrocketed by 336%. It boasted that OCI was faster and less costly than other cloud networks and that it was training some of the world's most important generative AI models. The company also noted that its customers include OpenAI, xAI, Cohere, and Meta Platforms. One advantage Oracle has in the cloud computing space is that its data centers are relatively new. It also has multi-cloud agreements with the big three cloud computing companies, allowing customers to use its services with multiple cloud providers within a single environment. While its cloud business is doing well, Stargate represents a huge revenue growth opportunity for the company. Even with the first data center under construction, it will take time before it is built and then ramps up. As such, expect it to start to be a big growth driver in a couple of years. Morgan Stanley has estimated the first data center could add $10 billion in annual revenue in fiscal year 2027 (ending May 2027). While not involved in the Stargate project, more data center spending means the need for more advanced chips, which means Taiwan Semiconductor Manufacturing (TSM -13.33%), or TSMC for short, is once again a big beneficiary. The company is the world's largest semiconductor contract manufacturer and is the primary manufacturer of Nvidia's GPUs. With its rivals Intel and Samsung struggling, TSMC has flourished. Its strength in 3-nanometer and 5-nanometer technologies makes it the undisputed leader in high-performance computing. In Q4, its revenue surged 37%. The company's leadership position has also given it strong pricing power. It has reportedly once again raised prices for its services this year. This has also been leading to gross margin expansion, with its gross margins improving by 600 basis points year over year to 59% in Q4. Between Stargate, Microsoft, and Meta's AI infrastructure spending, there will be a lot of future demand for TSMC's chipmaking services. Expect this to continue to drive strong growth in the years ahead as the company increases its own manufacturing capacity. The stock also trades at an attractive valuation, with a forward P/E ratio of under 25 times 2025 analyst estimates.

President Donald Trump Just Announced Project Stargate: 3 Unstoppable Stocks That Could Profit From the Artificial Intelligence (AI) Buildout | The Motley Fool

This planned $500 billion AI infrastructure investment could mint a few big winners. Among the biggest market drivers over the past couple of years have been the developments in the artificial intelligence (AI) industry. In simplest terms, AI's advanced algorithms can be deployed to streamline and automate many time-consuming tasks, freeing up people for higher-level work. As a result, many believe that generative AI will spark a wave of productivity growth, creating windfall profits for the companies that make the best use of this cutting-edge technology. Earlier this week, President Donald Trump announced an initiative dubbed Project Stargate, which he said will be the "largest AI infrastructure project in history." The private joint venture will initially be funded by SoftBank, OpenAI, Oracle, and AI-focused investment fund MGX, and "intends to invest $500 billion over the next four years building AI infrastructure," according to the press release. The initiative plans to build as many as 20 immense data centers across the country designed to meet the processing power needs of AI systems. The announcement also revealed the identities of several companies that will be tapped to provide the necessary technology. Let's look at three that stand to profit from this sizable infrastructure investment. It shouldn't be any surprise that Nvidia (NVDA -3.12%) was selected as one of Project Stargate's "key initial technology partners." The company pioneered the graphics processing units (GPUs) that have become the staple providers of the specific types of computing horsepower that AI requires. Nvidia GPUs are the gold standard for AI processing -- most of which takes place in data centers. As a result, the company dominates the niche, controlling 98% of the market in 2023, similar to its market share in 2022. While the figures for 2024 have yet to be collated, industry watchers expect to learn that Nvidia retained an industry-leading share of the data center GPU market. There have been concerns among some investors that Nvidia's growth may have peaked, but the Stargate project's scope helps illustrate the long runway ahead of it. In fact, Melius Research analyst Ben Reitzes surmises the chipmaker could be the biggest single beneficiary of Project Stargate, as "well over $100 billion" of its budget could go to Nvidia. Trading at just 33 times next year's expected earnings, Nvidia is attractively priced in light of its ongoing opportunities. OpenAI, the creator of ChatGPT, has a long-standing relationship with Microsoft (MSFT -0.59%), so it makes sense the company would be tapped as a supplier. The press release noted that the initiative "builds on the existing OpenAI partnership with Microsoft" and that the company would continue to "increase its consumption of Azure," Microsoft's cloud infrastructure service. Microsoft has made it crystal clear that demand for AI is driving its cloud growth. CEO Satya Nadella noted that in its fiscal 2025 first quarter (which ended Sept. 30), Azure Cloud took share from its rivals, growing 34% year over year, compared to the industry's 24% growth rate. Nadella also noted that 12 percentage points of that growth was the result of demand for AI-related services. Perhaps more importantly, he pointed out that "demand continues to be higher than our available capacity." The company has already taken steps to address that imbalance. In a blog post earlier this month, Microsoft Vice Chair and President Brad Smith noted the company is on track to invest $80 billion in data centers "to train AI models and deploy AI and cloud-based applications around the world." The company was quick off the blocks to provide AI solutions, giving it a head start that's now paying off. The combination of unrelenting demand for AI and Microsoft's leadership position in the space suggests that the best is likely yet to come. Microsoft stock currently trades for 34 times next year's expected earnings, a reasonable valuation given its place in the AI ecosystem. Arm Holdings (ARM -2.43%) also has a lot to gain from the Stargate project, thanks largely to its close ties to Nvidia and its contributions to its AI-centric chips. In an interview this week, CEO Rene Haas said, "It's a big, big, deal." While Nvidia has begun shipping its new Blackwell processors, a look at its previous top-of-the-line Grace Hopper GH200 Superchip can help provide context. The GH200 combines CPU and GPU technology on the same processor to meet the rigorous demands of AI. It incorporates two Grace CPUs, each of which contains 72 Arm V9 cores, for a total of 144 CPU cores contained in each chip. Reports suggest the Blackwell GB200 platform contains the same number of these high-end cores, which bodes well for Arm. In an interview last year, CEO Rene Haas noted that many of Arm's customers were shifting to the V9 and using more of these cores per device. That's important, because the royalty rate for the V9 is twice that of its predecessor, which suggests Arm's sales growth will continue to accelerate. Arm's rapid growth has been accompanied by a commensurate increase in its valuation, though the most commonly used metrics fall short in assessing high-growth stocks. Using the more appropriate price/earnings-to-growth (PEG) ratio, Arm's valuation clocks in at 0.24. Any stock with a positive number less than 1 for that metric is generally viewed as being undervalued.

Stargate AI Project: What AI Stocks Could Benefit in 2025 and Beyond? | The Motley Fool

On Tuesday, President Donald Trump announced The Stargate Project, a private $500 billion artificial intelligence (AI) infrastructure project in the United States, as I reported on Wednesday. He heralded it as the "largest AI infrastructure project, by far, in history." Stargate is a joint venture (JV) between three leading technology companies heavily involved in AI: Oracle (ORCL -1.54%), SoftBank Group (SFTBF 1.43%), and OpenAI. Oracle co-founder and chairman Larry Ellison, SoftBank founder and CEO Masayoshi Son, and OpenAI co-founder and CEO Sam Altman joined the president at the press conference and they outlined the project. Stargate "intends to invest $500 billion over the next four years building new AI infrastructure for OpenAI in the United States. We will begin deploying $100 billion immediately," OpenAI said in its Tuesday press release. The building out of 10 massive data centers, each of which will be half a million square feet, has begun in Abilene, Texas, Ellison said at the White House press conference. The group is also "evaluating potential sites across the country for more campuses," per the OpenAI release. So, what are all the companies known to be involved in Stargate? Data sources: Yahoo! Finance, finviz.com, and YCharts. *Not publicly traded. P/E = price-to-earnings ratio. EPS = earnings per share. Data to Jan. 23, 2025. OpenAI's press release included the key companies involved in Stargate and how responsibilities will be divided: Oracle is an enterprise software provider, best known for its database software, and provides cloud computing services. The company has made many acquisitions since its founding in 1977. Its largest one to date is Cerner, which it bought in a $28.3 billion deal that closed in June 2022. Cerner is a leading provider of electronic health record systems. SoftBank, based in Japan, is an investment holding company that invests in companies around the world. It primarily focuses on tech companies. Notably, it owns a majority stake in chip designer Arm Holdings. In September 2024, SoftBank spun off a portion of its Arm stake via an initial public offering (IPO). This was after Nvidia's deal to acquire Arm from SoftBank fell through due to regulatory issues. OpenAI is best known as the creator of ChatGPT, the chatbot that wowed the tech world following its release in late 2022. The chatbot is powered by generative AI, a relatively new tech that greatly expands the use cases for AI. ChatGPT's release has led to a stampede among companies and other entities to acquire generative AI capabilities. OpenAI also has other products. Microsoft is a big investor in OpenAI. Nvidia is the leading provider of chips and related technology -- hardware and software -- to enable advanced AI capabilities. Its graphics processing units (GPUs) are the gold standard for processing AI workloads in data centers, which includes training AI models and running AI applications. They're also used outside the data center in "AI edge applications," including within vehicles that are under development for self-driving capabilities and inside robots from drones to humanoids under development. Microsoft is a software giant best known for its Windows operating system to run personal computers. Its cloud computing service, Azure, is a major part of its current business. In 2019, Microsoft invested its first $1 billion in OpenAI and as of late last year, its total funding commitment was $13 billion. Microsoft has incorporated OpenAI's tech in its products. Arm is the world's largest designer of architectures for central processing unit (CPU) chips. It licenses its intellectual property (IP) to other semiconductor companies and manufacturers of consumer and industrial electronic products. So, it generates licensing revenue and royalties on products sold that use its IP. Its chips have long been ubiquitous in smartphones and other small electronic gadgets, but its growth is largely coming from its newer AI data center market. I think Nvidia stock is the best stock of this group, though it probably has a somewhat higher risk level than at least Microsoft and Oracle. As the table shows, Nvidia has the highest projected earnings growth rate over the next five years. And its stock valuation of 34.4 times forward projected earnings is reasonable for a company that Wall Street estimates will increase earnings at an average annual pace of 35% over the next five years.

Prediction: This Stock Will be the Biggest Winner of the U.S.' New $500 Billion AI Project. | The Motley Fool

Artificial intelligence (AI) companies saw revenue soar last year as data centers built out infrastructure and customers launched AI projects -- and as a result, investors piled into shares of players involved in this high-growth technology. These stocks even drove index gains last year, with AI chip designer Nvidia (NVDA -3.12%) scoring the best performance in the Dow Jones Industrial Average and AI software company Palantir Technologies posting the greatest gain in the S&P 500. Following such momentum, many investors wondered if AI players had seen their best days in 2024 and if growth might stagnate in the new year. After all, revenue and stock prices rarely advance nonstop without marking a pause at some point. But right now may not be the time for any kind of slowdown. Newly inaugurated President Donald Trump along with AI leaders Oracle, OpenAI, and SoftBank this week announced a $500 billion AI project to assure U.S. leadership in the technology. And my prediction is one stock in particular will be the biggest winner of this massive investment. Let's find out more. So, first, let's dive into the Stargate Project. Oracle, OpenAI, and SoftBank, immediately investing $100 billion, will create a new company called Stargate to build out AI infrastructure in the U.S. The total investment may reach as much as $500 billion within a period of four years. Trump called Stargate the "largest AI infrastructure project in history," and OpenAI said in a statement that the project "will secure American leadership in AI." OpenAI also listed Arm, Microsoft, Nvidia, and Oracle as the project's main technology partners. The announcement didn't offer details about how much of the investment would go to particular companies for their products and services -- but I predict the biggest winner of this deal will be Nvidia. To understand why, it's important to take a look at the AI chip giant's path so far. Nvidia has built a dominant position in the world of graphics processing units (GPUs), or the chips that power crucial AI tasks like the training and inferencing of large language models. The company offers the world's most powerful GPUs, and customers aiming to lead in AI generally want the best for their projects -- so turn to Nvidia for GPUs. This is confirmed by what Nvidia chief Jensen Huang has called the "insane" demand for the company's latest AI architecture and chip, Blackwell. Demand has surpassed supply as the company launches this new platform, and the world's biggest tech companies -- from Microsoft to Oracle -- are customers. It's clear that this buildout, requiring data centers and accelerated computing systems, needs GPUs and related products. And the intention to make the U.S. a worldwide leader implies the need for the best possible materials. Enter Nvidia's GPUs. "As part of Stargate, Oracle, Nvidia, and OpenAI will closely collaborate to build and operate this computing system," OpenAI said in the announcement. Considering that a single Blackwell GPU costs between $30,000 to $40,000, and Nvidia customers generally purchase systems incorporating many GPUs, this new infrastructure buildout represents a considerable opportunity for Nvidia. (For example, Nvidia customers may opt for the GB200 NVL72, which connects 72 Blackwell GPUs and several central processing units or the main processors that power standard computers.) All of this means Stargate could quickly add up to an enormous revenue stream for Nvidia. So, what does this mean for you as an investor? Right now, Nvidia stock trades for 49x forward earnings estimates, and this may seem expensive. But this valuation actually is reasonable considering the tech giant's earnings track record -- double- and triple-digit revenue growth in recent quarters along with gross margin topping 70% -- and long-term prospects. Today's $200 billion AI market is expected to soar beyond $1 trillion by the end of the decade, setting the stage for more growth ahead for Nvidia. And on top of that, my prediction is Nvidia, thanks to the quality of its GPUs, will benefit more than any other company from the Stargate Project. So, this AI star's enormous gains may be far from over, and that makes it a solid buy for investors right now.

These are the 2 stocks that will win the most from Trump's AI project Stargate, analysts say

President Donald Trump's Stargate foray could present a major boon for these technology companies, according to Wall Street. The $500-billion joint venture between OpenAI, Oracle and SoftBank announced earlier this week aims to beef up artificial intelligence infrastructure in the U.S. Shares of Oracle and Microsoft have rallied nearly 15% and 3%, respectively, since the start of the week. Microsoft is an investor in OpenAI. ORCL 5D mountain Oracle shares over the last five trading days Wall Street views the move as an overall positive for the industry, with Citi's Tyler Radke noting it should support strong capital expenditures by buoying demand for for greater inference and training capacity. The project also requires more computing and electricity which could lead to greater investments in grid infrastructure and power transmission, said UBS' Solita Marcelli. Goldman Sachs analyst Kash Rangan views Oracle and Microsoft as the prime winners from the government's prioritization of AI. Near term, Rangan views Microsoft as the likely bigger winner given its strong balance sheet and capital expenditures for 2025. Tailwinds for Oracle may take longer, the analyst said, citing the two- to three-year "lead time commitment" for operating AI datacenters. TD Cowen's Derrick Wood expects the agreement to lead to more capital AI investments for Oracle, which should benefit from a diversion of some OpenAI's training workloads away from Microsoft. This should also lead to a new backlog for Oracle and help the company boost its cloud infrastructure revenues at a compounded annual growth rate exceeding 50% through 2027. For Microsoft, unloading some of its OpenAI training workloads will enable the company to use more graphics processing units for inference and improve capital expenditure efficiencies, he added. "These dynamics should help with MSFT's efforts to ease supply constraints, bring more revenue-generating AI capacity online, & re-accelerate Azure growth towards the mid 30% level," Wood wrote. Microsoft and Oracle are far from the only winners from the Stargate venture. Piper Sandler's James Fish highlighted Arista Networks as a potential winner, noting its exposure to Oracle, Microsoft and OpenAI, as well as the strength of its ethernet switching portfolio. "Given switching represents > 50% of networking spend and Arista's > 30% share of high-end datacenter switching, we see this as a +$6B [serviceable addressable market] over 5 years," the analyst wrote. Fish also views Pure Storage as an "underappreciated way" to invest behind Stargate to meet storage capacity, estimating a $10 billion total addressable market.

The chip stocks that will benefit the most if funding for Trump's AI project Stargate comes through

Several semiconductor makers should reap the biggest rewards from President Donald Trump's Stargate artificial intelligence initiative, tech analysts say. The project -- a $500-billion joint venture backed by Oracle , OpenAI and SoftBank -- aims to build up AI infrastructure in the U.S. over the next four years. Many on Wall Street expect the project to reward the entire technology industry, supporting inference, training, semiconductor and grid infrastructure growth. ORCL 5D mountain Oracle shares over the last five trading days Beneficiaries will include Nvidia , Broadcom and Credo Technology in the GPU/custom silicon area; Arm Holdings in key chip intellectual property; and Micron Technology in high-bandwidth memory products, wrote Mizuho Securities analyst Vijay Rakesh. The firm views Broadcom as one the biggest winners, estimating that its new Trainium platform could grow its serviceable addressable market to between $60 billion and $90 billion, from $20 billion in 2024. Broadcom should also benefit from owning intellectual property rights for chip architecture, software and packaging. "We assume ~ $40-50B incremental of the ~$500B spend by 2027-28E from OpenAI could be on custom silicon (AVGO) as we move later into the project timeline as AVGO continues to develop its own chip," Rakesh wrote, referring to Broadcom by its ticker symbol. Beyond Broadcom, Rakesh views Credo and Micron Technology as also profiting from Stargate, citing connectivity and storage needs. Arm stands to gain from an estimated $150-$200 million a year of royalty revenue from graphics processing units and networking designs. Still in all, even as other companies make strides, Rakesh continues to expect Nvidia to hold onto its leading position as an AI chip supplier.

Nvidia, Microsoft, Or Oracle: Which Stock Among These Stargate AI Project Beneficiaries Are The Least Expensive To Own? - Invesco AI and Next Gen Software ETF (ARCA:IGPT), Microsoft (NASDAQ:MSFT)

Elon Musk questioned the project just hours after its announcement. After U.S. President Donald Trump announced the ambitious $500 billion Stargate project, its initial equity funders SoftBank, OpenAI, Oracle Corp., and MGX along with its technology partners Nvidia Corp. and Microsoft Corp. have been in focus. We examine which of these U.S.-listed beneficiaries are the least expensive to own by the investors. What Happened: Oracle, Nvidia, and Microsoft are the three U.S.-listed companies that are directly involved in the Stargate project. According to the data cumulated from Benzinga Pro, Microsoft and Oracle are valued less than two times their peers based on the forward price-to-earnings ratio. While Nvidia's valuation is just slightly lower than its peers. Based on the forward P/E: Oracle is 2.72 times less expensive than its industry average. Microsoft is 2.41 times cheaper as compared to its peers. Nvidia is just 1.08 times less expensive compared to its industry average. Thus, Oracle is the least expensive stock to hold among the direct Stargate beneficiaries. See Also: Tesla Rivals Rivian, Lucid Fall Sharply After Donald Trump Revokes Biden's EV Targets, Freezes Infra Funding: Here's What Technical Analysis Says Why It Matters: The project, announced Tuesday during a White House briefing with President Trump, marks a collaboration between OpenAI, SoftBank, and Oracle to create a vast artificial intelligence infrastructure across the U.S. The primary technology partners involved are Arm, Microsoft, NVIDIA, Oracle, and OpenAI. The development is already underway in Texas, starting with a 500,000-square-foot data center in Abilene, with additional locations being assessed nationwide as final agreements are being made for more campuses. The initiative aims to invest $100 billion right away, with plans for nine additional facilities and the possibility of expanding to 20 locations. Tesla Inc. TSLA CEO Elon Musk questioned the project just hours after its announcement, stating that lead investor SoftBank Group has "well under $10B secured." Musk said in an X post dated Jan. 22 that "They don't actually have the money." Price Action: The exchange-traded fund tracking the AI stocks, Invesco AI and Next Gen Software ETF IGPT has risen by 9.72% over the last six months and 19.08% over the last year. While MSFT underperformed the ETF, both Nvidia and Oracle have outperformed IGPT in the same period. Read Next: PLTR Stock Is Up 166% In Last 6 Months. Now Dan Ives Sees Room For 17% More Growth: 'Our Recent Checks And Growing Confidence...Is Key To The Bull Thesis' Photo courtesy: Shutterstock IGPTInvesco AI and Next Gen Software ETF$49.000.02%WatchlistOverviewMSFTMicrosoft Corp$446.35-0.08%NVDANVIDIA Corp$146.41-0.55%ORCLOracle Corp$186.47-%TSLATesla Inc$411.86-0.13%Market News and Data brought to you by Benzinga APIs

Stargate Project: Microsoft Gains, Oracle Waits, Data Centers Face Long-Term Questions - Digital Realty Trust (NYSE:DLR), Equinix (NASDAQ:EQIX)

Stargate Project could shift OpenAI away from outsourced services, impacting third-party providers. The tech world is reeling after President Trump's announcement of the Stargate Project, a $500 billion initiative designed to catapult the U.S. to AI supremacy. The project, which will see SoftBank, OpenAI and Oracle Corp. ORCL join forces to build cutting-edge AI infrastructure, has immediate implications for key tech players like Microsoft Corp. MSFT and Oracle, as well as data centers, according to Goldman Sachs analyst Kash Rangan. "The Stargate Project is solidifying the importance of Gen-AI as an important tech theme for the years ahead" Rangan said in a note released Thursday. Microsoft: Early Bird Catches The Worm Rangan sees the Stargate Project as strongly positive for Microsoft. As an early investor in OpenAI, Microsoft has already committed heavily in AI infrastructure. The new project, while potentially increasing competition, reinforces Microsoft's existing advantages. "Being early to market and operational scaling experience is important," Rangan said. The analyst highlights the updated terms of Microsoft's partnership with OpenAI mitigate risks while maintaining significant upside. "From a financial perspective, MSFT gets to keep the equity upside while minimizing if not eliminating the risk given its involvement at ground zero with more parties stepping though Stargate to alleviate the capital burden," Rangan said. Oracle: Long-Term Potential, Near-Term Uncertainties While Oracle stands to benefit from increased demand for AI services, Rangan cautions that these benefits may take time to materialize. "It could not be until 2028 that Oracle gets to experience material benefits from the Stargate JV," he notes. This lengthy timeline is partly attributed to the substantial lead time required for the construction of necessary datacenter equipment. "We note that this is likely to take time to play out as supply constraints for necessary datacenter equipment have a ~3 year lead time," he added. Furthermore, the analyst highlighted uncertainties surrounding Oracle's financial commitments to the project, noting that its planned CapEx of over $15 billion in fiscal-year 2025 may need upward revisions. Datacenter Impact: Short-Term Boost, Long-Term Questions Remain The Stargate Project presents a mixed bag for datacenter operators like Digital Realty Trust Inc. DLR and Equinix Inc. EQIX. In the short term, the project could provide a boost, driven by tighter supply-demand dynamics in the market. "We see the announcement as a tactical positive, as we believe it reflects tighter supply/demand market dynamics than the market expects over the next two years," Rangan said. Yet, the long-term impact remains uncertain with the investment bank flagging the risk of shifting away from outsourced data centers. If OpenAI, which may utilize third-party providers like Digital Realty, decides to primarily leverage the infrastructure built by the Stargate Project, it could significantly diminish the demand for external data center services. Essentially, the Stargate Project could disrupt the existing market dynamics, posing a potential threat to the long-term growth of companies like Digital Realty. Read now: S&P 500 Hits Fresh Records At 6,100: Strong Earnings, Trump's AI Wager Fuel Bull Run Photo: Shutterstock DLRDigital Realty Trust Inc$181.27-0.64%Overview Rating:Speculative50%Technicals Analysis1000100Financials Analysis200100WatchlistOverviewEQIXEquinix Inc$919.82-0.58%MSFTMicrosoft Corp$443.36-0.64%ORCLOracle Corp$185.450.67%Market News and Data brought to you by Benzinga APIs

OpenAI forms biz to spend $500 billion on AI infrastructure

With help from SoftBank, Oracle, and MGX, Stargate Project plans to outspend Microsoft this year OpenAI, Oracle, SoftBank, and investment firm MGX on Tuesday announced plans to spend $500 billion on AI infrastructure in America over the next four years, to be used by the ChatGPT super-lab. Specifically, the four will pour said billions, starting with $100 billion, into a new company named The Stargate Project, which will be operated by OpenAI. Stargate will effectively take that money and build AI infrastructure for OpenAI to use to create its generative machine-learning models. Financial management will be handled by Japan's SoftBank, which in December committed $100 billion in US investment over the next four years; SoftBank supremo Masayoshi Son will be chairman of Stargate. "We will begin deploying $100 billion immediately," the companies wrote in a joint statement. "This infrastructure will secure American leadership in AI, create hundreds of thousands of American jobs, and generate massive economic benefit for the entire world." At a White House briefing where the plan was announced, Oracle chairman and Republican Larry Ellison said: "The data centers are actually under construction. The first of them are under construction in Texas. Each building is half a million square feet. There are 10 buildings currently being built but that will expand to 20, and other locations beyond the Abilene [Texas] location, which is our first location." Texas is also among the states cited by Emirati luxury property developer DAMAC, which recently pledged to invest $20 billion to support the construction of datacenters in the US. Other build sites elsewhere in America are also under consideration. Given OpenAI's reported talks with Broadcom, some of these sites may eventually house silicon designed specifically for OpenAI. The deal conveniently follows the Trump administration rescinding Executive Order 14110, the Biden administration's order on Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence. The Stargate Project involves SoftBank-owned Arm, Microsoft, Nvidia, Oracle, and OpenAI as technology partners. It represents a continuation of OpenAI's collaboration with Nvidia and adds Oracle as a new collaborator. Oracle and Nvidia shares rose in after-hours trading following Stargate's announcement. Microsoft shares, perhaps in response to a commitment by OpenAI "to increase its consumption of Azure," also saw after-hours gains. That commitment, by the way, came in a carefully worded announcement in which Microsoft - which has poured billions into OpenAI to use the super-lab's models to power its own Copilot family of AI assistants - revealed it was modifying its 10-year deal with OpenAI so that the Windows giant isn't necessarily the lab's sole exclusive cloud provider going forward. Microsoft will have a right to first refusal for providing OpenAI with more compute capacity as the latter needs, and if that doesn't work out, OpenAI can turn to another provider. It sound as though OpenAI intends to score more compute capacity for carrying out research and model training. Back to Stargate, and as an example of the kinds of applications the project expects to run on its shiny new infrastructure, Ellison cited electronic health record management that would help doctors employ AI to treat patients. Softbank's Masayoshi Son endorsed that sort of outcome, saying "...artificial super intelligence will come to solve the issues that mankind would never ever have thought that we could solve. This is the beginning of our golden age." "All of us look forward to continuing to build and develop AI - and in particular AGI - for the benefit of all of humanity," the companies said in their statement, referring to "artificial general intelligence," an ill-defined notion of AI models capable of human-level cognition that OpenAI CEO Sam Altman only a day earlier sought to downplay. "We believe that this new step is critical on the path, and will enable creative people to figure out how to use AI to elevate humanity." If Stargate manages to spend $100 billion on AI infrastructure in 2025 alone, it will top Microsoft's planned $80 billion building spree and probably beat Amazon's planned expenditure which has been forecast to top the $75 billion the outfit spent in 2024. Google has told investors that for 2025 it plans to blow through more than the $50 billion-plus it likely spent on compute infrastructure in 2024, though that increase (in percentage terms) will be less than the 60 percent jump from 2023 to 2024.

Stargate initiative 'directional win-win' for Oracle and Microsoft - TD Cowen By Investing.com

Investing.com-- Oracle Corporation (NYSE:ORCL) and Microsoft Corporation (NASDAQ:MSFT) stand to benefit significantly from their roles in the newly announced Stargate initiative - a $500 billion private-sector investment aimed at advancing artificial intelligence (AI) infrastructure, TD Cowen analysts said in a note. The Stargate joint venture, led by SoftBank Group Corp. (TYO:9984), OpenAI, Oracle, and Microsoft, with technology partners including NVIDIA Corporation (NASDAQ:NVDA) and Arm Holdings ADR (NASDAQ:ARM), marks a major step in AI infrastructure development, analysts said TD Cowen analysts highlighted Oracle as a key beneficiary. OpenAI plans to shift some AI training workloads from Microsoft Azure to Oracle Cloud Infrastructure (OCI) under restructured terms, they noted. Additionally, Oracle's role as a critical technology provider in the Stargate initiative is expected to drive significant AI-related capital investments into OCI, potentially boosting its revenues at a compound annual growth rate (CAGR) exceeding 50% through fiscal 2027, according to TD Cowen. For Microsoft, offloading OpenAI's training workloads to Oracle could ease supply constraints and allow it to focus on inference workloads, where it generates revenue. This shift could improve Microsoft's capital efficiency and support Azure's growth trajectory, potentially accelerating it back to the mid-30% range, according to the analysts. Analysts also pointed to Oracle's aggressive expansion plans, including a 10-to-20 data center buildout capable of supporting massive AI workloads. The first facility, expected online in 2025, is part of a broader effort to bring significant new OCI capacity by 2026, further solidifying Oracle's position in the AI infrastructure market. While financial specifics remain unclear, TD Cowen described the Stargate venture as a "directional win-win" for both Oracle and Microsoft.

Microsoft Poised to Benefit From Stargate JV With Zero Money

(Bloomberg) -- When President Donald Trump joined tech executives on Tuesday to tout a multibillion-dollar artificial intelligence project led in part by OpenAI, one question sprang to mind: Where's Microsoft Corp.? Despite investing almost $14 billion in OpenAI and using the startup's AI models for its next-generation cloud services, Microsoft was mentioned only as a technology partner in a joint venture called Stargate launched by OpenAI, SoftBank Group Corp. and Oracle Corp. Then, in a blog post, the software giant said OpenAI could use rival cloud services to train and run its AI models with Microsoft's permission, watering down an exclusivity contract. The flurry of announcements prompted renewed speculation that the Microsoft-OpenAI relationship has frayed somewhat, although each party currently has more to gain together than apart. But Microsoft has become less willing to spend even more money financing the computing power OpenAI says it needs to retain a lead in artificial intelligence. In 2023, Microsoft was close to a deal to invest tens of billions of additional dollars in OpenAI, according to people familiar with the situation. At the time, OpenAI Chief Executive Officer Sam Altman was talking to Microsoft about helping fund a massive expansion of AI infrastructure with investors in Asia and the Mideast, the people said. Any Microsoft investment would likely have furthered those ambitions. Then Altman was briefly fired, exposing instability at the heart of OpenAI. Altman was reinstalled as CEO, but the upheaval prompted Microsoft to abandon plans to invest more money, said one of the people, who requested anonymity to discuss private negotiations. Altman's infrastructure plans have since changed several times, but Microsoft CEO Satya Nadella had lost enthusiasm for contributing significant sums. The New York Times previously reported Microsoft's planned investment in OpenAI. Microsoft did pump $750 million into OpenAI's most recent $6.6 billion funding round. But its refusal to make a larger commitment prompted Altman to look for other partners and to chafe against a contractual exclusivity provision that required OpenAI to get all of its cloud capacity from Microsoft through 2030. Nadella and Altman have had many conversations about the latter's ambitions to dramatically scale up computing capacity, and Microsoft may invest in an OpenAI infrastructure project, including possibly Stargate, in the future, according to one of the people. OpenAI needs more computing capacity to fulfill its ambitions, and companies of its current scale don't generally work with a single partner, according to a person familiar with the situation. The revised deal between OpenAI and Microsoft indicates that the two companies continue to work together closely, the person added. Microsoft views the revised contract with OpenAI as advantageous, according to people familiar with the company's thinking. The software giant retains its share of OpenAI's revenue and is the largest investor in a company that may now become even more valuable -- though the size of that stake could change as the startup works to restructure as a for-profit. And Microsoft also still has access to OpenAI models, even if they're trained in a data center funded by Softbank or Oracle. The Stargate joint venture and rejiggered partnership with OpenAI also lets Microsoft offload some AI spending onto rivals. That's a positive development for a company that has pledged to lavish $80 billion this fiscal year on capital expenditures and is monetizing those investments at a slower pace than Wall Street would prefer. When asked by CNBC to comment on the Stargate joint venture, Nadella said: "Look, all I know is I'm good for my $80 billion."

OpenAI Wrestles With Microsoft Stake Valuation As It Looks To Transition To For-Profit Entity Amid Trump's $500 Billion Stargate AI Project: Report - Microsoft (NASDAQ:MSFT), Oracle (NYSE:ORCL)

Sam Altman-led OpenAI is reportedly engaged in intricate discussions to transform into a for-profit entity, but its board is grappling with valuing Microsoft Corp.'s MSFT stake while negotiating the worth of its new charitable division at $30 billion. What Happened: The restructuring talks, ongoing since September, aim to split OpenAI into two entities. The charitable arm would retain a stake in the newly formed public benefit corporation (PBC). Determining Microsoft's equity in the PBC is a significant hurdle, as is deciding the equity for CEO Altman, according to a report by the Financial Times. This comes at a time when President Donald Trump's administration announced the $500 billion Stargate AI project, with OpenAI, Oracle Corp. ORCL, and SoftBank Group SFTBY leading it. According to the report, the charitable arm's valuation could reach approximately $30 billion, with most of it realized as equity in the PBC. The rest would be in cash. Also See: Satya Nadella Stands Firm After Elon Musk Questions Stargate's $100 Billion Funding Potential: 'All I Know Is, I'm Good For My $80 Billion' The transition is crucial for OpenAI to secure additional funding for advanced AI development. However, it marks a departure from its non-profit roots, raising legal and ethical questions. The company reportedly has a two-year deadline to finalize the conversion, or investors may reclaim part of their $6.6 billion investment. Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox. Why It Matters: The transition of OpenAI to a for-profit structure has sparked significant legal and industry interest. The move is part of OpenAI's strategy to evolve and align with its mission of ensuring artificial general intelligence (AGI) benefits humanity, as outlined in their transition plans announced in December. However, this shift has not been without controversy. Elon Musk, one of the co-founders of OpenAI, has been actively opposing the change. In early January, Musk's legal team urged the attorneys-general of California and Delaware to enforce an auction of OpenAI's stake. This legal battle has drawn attention from prominent figures like Geoffrey Hinton, known as the "Godfather of AI," who has sided with Musk in this dispute. The outcome of these discussions and legal challenges could significantly impact the future of AI development and the balance between profit and public benefit in the tech industry. Check out more of Benzinga's Consumer Tech coverage by following this link. Read Next: OpenAI's Sam Altman Flip Flops On Trump After $500 Billion Stargate AI Project, Says 'I Wish I Had Done More Of My Own Thinking' Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: Shutterstock MSFTMicrosoft Corp$446.28-0.10%Overview Rating:Good62.5%Technicals Analysis1000100Financials Analysis400100WatchlistOverviewORCLOracle Corp$188.000.82%SFTBYSoftBank Group Corp$33.40-%Market News and Data brought to you by Benzinga APIs

OpenAI Unveils "Project Stargate" - $500 Billion AI Mega Factories

OpenAI has announced "Project Stargate," an ambitious $500 billion initiative aimed at transforming artificial intelligence (AI) infrastructure across the United States. This new project begins with a $100 billion facility in Texas and aspires to establish the U.S. as a global leader in AI innovation, stimulate economic growth, and bolster national security. Supported by prominent funders and technology partners, Project Stargate highlights the pivotal role AI plays in shaping industries, economies, and international relations. But what does this mean for everyday people? How will it shape industries, and what are the risks of diving headfirst into such uncharted territory? While the scale of Project Stargate is undeniably impressive, the implications are even more profound. In this overview by Matthew Berman, learn more about the vision, partnerships, and challenges behind this monumental endeavor, exploring how it could transform not just technology but the very fabric of our society. This $500 billion initiative isn't just about building innovative AI infrastructure; it's about redefining the U.S.'s role in the global AI race, creating jobs, and addressing the pressing challenges of tomorrow. At the heart of Project Stargate lies a bold vision to develop state-of-the-art AI infrastructure nationwide. The first phase involves the construction of a $100 billion facility in Texas, which will serve as a central hub for AI research, development, and deployment. Over the next decade, OpenAI plans to invest an additional $400 billion to establish similar facilities across the country, creating a robust network of AI innovation centers. This initiative goes beyond technological advancement. It represents a significant step toward reindustrialization, offering thousands of high-skilled jobs and revitalizing regions that have historically relied on manufacturing. By focusing on domestic infrastructure, OpenAI aims to position the U.S. as a global leader in AI, making sure that the nation remains at the forefront of technological progress. The scale of this investment underscores the growing importance of AI in modern economies. By committing resources to innovative infrastructure, OpenAI seeks to address the increasing demand for AI capabilities while fostering innovation that benefits both the private and public sectors. The success of Project Stargate depends heavily on collaboration with leading funders and technology partners. OpenAI has secured support from several key contributors, including: These partnerships reflect the interconnected nature of the AI ecosystem, where collaboration across industries is essential for achieving technological breakthroughs. By combining expertise from diverse sectors, Project Stargate aims to accelerate the development and deployment of advanced AI technologies. The involvement of such prominent players also highlights the strategic importance of AI in shaping the future. Each partner brings unique capabilities to the table, making sure that Project Stargate is equipped to address the complex challenges of AI development. Explore further guides and articles from our vast library that you may find relevant to your interests in OpenAI. Project Stargate is not merely an infrastructure initiative -- it is a strategic effort to secure U.S. dominance in the rapidly evolving field of AI. A primary focus of the project is advancing artificial general intelligence (AGI), a sophisticated form of AI capable of performing any intellectual task that a human can. AGI is widely regarded as the next frontier in AI development, with the potential to transform industries such as healthcare, finance, and national security. The geopolitical implications of AGI are equally significant. As nations compete in the global AI race, the first to achieve AGI could gain a decisive strategic advantage, reshaping global power dynamics. By investing in U.S.-based infrastructure, OpenAI ensures that these advancements align with national interests, reducing reliance on foreign supply chains and mitigating potential security risks. Additionally, Project Stargate aims to address critical challenges associated with AGI development. These include making sure alignment with human values, establishing ethical oversight, and preparing for potential disruptions in labor markets and other sectors. By prioritizing these considerations, OpenAI seeks to balance the pursuit of innovation with the need for responsible development. While Microsoft remains a key partner in Project Stargate, the initiative marks a shift in OpenAI's operational strategy. Historically, OpenAI has relied heavily on Microsoft Azure for cloud computing, with Microsoft holding rights to OpenAI's intellectual property and APIs until AGI is achieved. However, OpenAI is now diversifying its partnerships, introducing new players into the ecosystem and reducing its dependence on a single provider. Microsoft retains a "right of first refusal" for new capacity deals, making sure its continued involvement in the project. This diversification reflects a broader industry trend toward decentralization, which fosters competition and drives innovation within the AI sector. By expanding its network of collaborators, OpenAI aims to create a more resilient and dynamic ecosystem capable of addressing the complex demands of AI development. The evolving relationship between OpenAI and Microsoft also highlights the changing dynamics of the AI industry. As organizations seek to balance collaboration with independence, initiatives like Project Stargate demonstrate the importance of flexibility and adaptability in achieving long-term success. Despite its ambitious goals, Project Stargate raises important questions about the future of AI. While the initiative promises significant economic and technological benefits, it also presents challenges that must be addressed to ensure responsible development. Key concerns include: The potential evolution of AGI into artificial superintelligence (ASI) -- systems that surpass human intelligence in all respects -- introduces additional challenges. ASI raises existential risks related to control, governance, and accountability, emphasizing the need for proactive measures to address these concerns. By prioritizing ethical considerations and long-term planning, OpenAI aims to mitigate these risks while maximizing the benefits of AI innovation. Project Stargate serves as a reminder of the importance of balancing technological progress with societal responsibility. Project Stargate also highlights the intensifying competition among nations to lead in AI innovation. Governments worldwide are investing heavily in AI research, recognizing its potential to reshape industries and geopolitics. The race to achieve AGI is often viewed as a high-stakes contest, where the first to succeed could dominate global power dynamics for decades. For the United States, Project Stargate represents a critical step in maintaining its leadership position. By investing in domestic infrastructure and fostering innovation, OpenAI aims to ensure that AGI development aligns with democratic values and national interests. This initiative underscores the strategic importance of AI in shaping the future, both at home and abroad. As the global AI race accelerates, Project Stargate positions the U.S. at the forefront of innovation, setting the stage for a new era of technological and economic leadership.

OpenAI's New 'Stargate Project' Will Expand Company's AI Infrastructure

SoftBank, OpenAI, Oracle, and MGX are the initial equity funders OpenAI announced the formation of a new company, dubbed The Stargate Project, on Tuesday. The new venture of the firm will focus on building artificial intelligence (AI) infrastructure in the US. The company announced that it would spend a total of $500 billion (roughly Rs. 43 lakh crore) to build the capacity. The development comes after the AI firm suffered several outages in recent times and had to put up a rate limit on its video generation platform Sora to ease the load on servers. Notably, Microsoft also issued a statement highlighting that the venture did not alter the existing deal it had with OpenAI. In a blog post, OpenAI announced that The Stargate Project was aimed at both strengthening the AI firm and securing American leadership in AI. The plan is to invest $100 billion (roughly Rs. 8.6 lakh crore) immediately and the rest ($400 billion) over the next four years. The initial equity funders in the venture are SoftBank, OpenAI, Oracle, and MGX. SoftBank and OpenAI will be the lead partners, with the former handling financial responsibility and the latter handling operational responsibility. On the technology front, OpenAI is partnering with Arm, Microsoft, NVIDIA, and Oracle. Nvidia and OpenAI will build and operate the new AI infrastructure. The post highlighted that the infrastructure building was already taking place in Texas and the company was evaluating other potential sites. Notably, OpenAI already has a partnership with Microsoft which will continue till 2030. Under the agreement, Microsoft's Azure cloud service platform has exclusive rights to OpenAI API. Microsoft, in a statement issued on Wednesday, highlighted that all the existing terms of the deal will continue to be in place. Microsoft also added that OpenAI "recently made a new, large Azure commitment that will continue to support all OpenAI products as well as training." The tech giant said that it has approved the ChatGPT maker's ability to build additional capacity, which will primarily be used for research and training of models. Last year, The Information reported that OpenAI leadership was getting frustrated with Microsoft as the feeling in the company was that Azure was not moving fast enough to scale its servers to meet OpenAI's computational needs.

OpenAI signs deal with Oracle, Softbank for $500bn expansion across US

Azure consumption will rise despite end of exclusivity deal ChatGPT maker OpenAI has revealed its huge new Stargate Project, which it hopes will improve the state of artificial intelligence and boost the tech sector across the US. In a blog post announcing the launch, the AI giant confirmed it had signed a deal with SoftBank (lead partner), Oracle (initial equity funder) and MGX (initial equity funder) to provide $500 billion in funding over the course of four years. Project Stargate's wheels are already spinning, with $100 billion made available "immediately" to start work, OpenAI noted. "This infrastructure will secure American leadership in AI, create hundreds of thousands of American jobs, and generate massive economic benefit for the entire world," the company's statement added. OpenAI described the project as a "re-industrialization" effort for the US, adding that it would also help strengthen the national security of both America and its allies. Investments are currently headed to Texas, but the partnership is exploring further sites across the US to build more campuses. Key initial technology partners will include Arm, Microsoft, Nvidia, Oracle and OpenAI, but it's the latter three that will build and operate the computing system. "This builds on a deep collaboration between OpenAI and NVIDIA going back to 2016 and a newer partnership between OpenAI and Oracle," it added. On the same day, Microsoft shared an update on its deal with OpenAI, confirming that it would no longer be the company's exclusive cloud provider. However, with the launch of Project Stargate, OpenAI said it would continue to increase its consumption of Azure, Microsoft's cloud computing platform. The announcement concluded: "All of us look forward to continuing to build and develop AI - and in particular AGI - for the benefit of all of humanity. We believe that this new step is critical on the path, and will enable creative people to figure out how to use AI to elevate humanity."

Microsoft Poised to Benefit From Stargate JV With Zero Money

When President Donald Trump joined tech executives on Tuesday to tout a multibillion-dollar artificial intelligence project led in part by OpenAI, one question sprang to mind: Where's Microsoft Corp.? Despite investing almost $14 billion in OpenAI and using the startup's AI models for its next-generation cloud services, Microsoft was mentioned only as a technology partner in a joint venture called Stargate launched by OpenAI, SoftBank Group Corp. and Oracle Corp. Then, in a blog post, the software giant said OpenAI could use rival cloud services to train and run its AI models with Microsoft's permission, watering down an exclusivity contract.

Microsoft loses status as OpenAI's exclusive cloud provider

U.S. President Donald Trump speaks in the Roosevelt Room of the White House while SoftBank CEO Masayoshi Son, Oracle CTO Larry Ellison, and OpenAI CEO Sam Altman look on on January 21, 2025 in Washington, DC. Trump is expected to announce investment in artificial intelligence (AI) infrastructure. Microsoft, the biggest investor in OpenAI and its principal cloud partner, is losing its designation as exclusive provider of computing capacity for the artificial intelligence startup. In a blog post on Tuesday, Microsoft said that it's still in a favorable position with OpenAI. Going forward, when OpenAI seeks additional capacity, Microsoft will have the "right of first refusal" before OpenAI checks with other parties. The change in their relationship was disclosed as part of President Donald Trump's announcement of the Stargate Project, a joint venture with OpenAI, Oracle and Softbank to invest billions of dollars in AI infrastructure in the U.S. Executives from those companies committed to invest an initial $100 billion and up to $500 billion over the next four years in the project, which will be set up as a separate company. Oracle is a "key initial technology partner" alongside Arm, Microsoft and Nvidia in setting up data center infrastructure, OpenAI said in a blog post. "The data centers are actually under construction," Oracle Chairman Larry Ellison said at a press conference at the White House, alongside Trump. "The first of them are under construction in Texas. Each building is a half a million square feet. There are 10 buildings currently being built, but that will expand to 20 and other locations beyond the Abilene location, which is, which is our first location." Oracle shares jumped 7% on Tuesday. In 2019, three years before the launch of ChatGPT, Microsoft invested $1 billion in OpenAI, which committed to moving its services to Azure. As OpenAI's computing needs expanded, Microsoft signed contracts with third-party cloud providers, such as CoreWeave, to supplement its Azure cloud infrastructure. Oracle entered the mix last year. The database software maker, which trails Amazon, Microsoft and Google in the cloud market, said in June that Microsoft's Azure AI platform would be extended to Oracle's cloud. OpenAI said on Tuesday that it will continue to increase consumption of Azure, and Microsoft said OpenAI recently made "a new, large Azure commitment" for products and model training. Microsoft still has rights to OpenAI's intellectual property, which can go in products such as Copilot. And it still has the exclusive on supplying computing requests for OpenAI's application programming interface. But the relationship has shown signs of strain, and Microsoft named OpenAI as a competitor in July. Microsoft CEO Satya Nadella talked about OpenAI CEO Sam Altman's big ambitions on a podcast with investors Brad Gerstner and Bill Gurley that was released in December. "What he wants to do, I have to accommodate for, so that he can do what he does," Nadella said. "And he needs to accommodate for the discipline that we need on our end, given the overall constraints that we may have."

Microsoft relaxes data center grip on OpenAI amid $500 billion joint venture

(Reuters) - Microsoft on Tuesday said it has changed some key terms of a deal with OpenAI after the ChatGPT creator announced a joint venture with Oracle and Japan's SoftBank Group to build up to $500 billion of new AI data centers in the United States. President Donald Trump gathered the leaders of the "Stargate" effort at the White House on Tuesday to announce the deal, saying it was intended to help keep the United States ahead of China and other rivals in the global AI race, using chips from Nvidia. Since 2019, Microsoft has had arrangements with OpenAI that gave the Redmond, Washington-based company the exclusive right to build new computing infrastructure for OpenAI. Microsoft, in a blog post, said it has "approved OpenAI's ability to build additional capacity, primarily for research and training of models." That opened the door for OpenAI to work with Oracle. A person familiar with the deal said that Stargate is a joint venture structured as new entity in which OpenAI has an equity stake, governance rights and operational control. It will have a separate board appointed by the founding members and its own CEO, this person said. The venture will also have other investors including United Arab Emirates firm MGX. Microsoft, along with Nvidia and Arm, will be a "technology partner" in the new venture, but is not listed as an equity funder. SoftBank CEO Masayoshi Son is will be the entity's board chairman, according to a statement from OpenAI posted on social media site X. But Microsoft said that it still retains the exclusive right to offer OpenAI's API - technology shorthand for application programming interface, which is the main way that software developers and business customers buy OpenAI's services. That means Oracle will not be able to host OpenAI's primary source of revenue. Oracle did not immediately respond to a request for comment on Microsoft's statements. Microsoft said it has "revenue sharing agreements that flow both ways" with OpenAI. "The key elements of our partnership remain in place for the duration of our contract through 2030, with our access to OpenAI's IP, our revenue sharing arrangements and our exclusivity on OpenAI's APIs all continuing forward," Microsoft said. Microsoft also said "OpenAI recently made a new, large Azure commitment that will continue to support all OpenAI products as well as training," referring to Microsoft's Azure cloud computing service. (Reporting by Stephen Nellis in San Francisco and Krystal Hu in Davos, Switzerland; Editing by Christopher Cushing)

Satya Nadella Stands Firm After Elon Musk Questions Stargate's $100 Billion Funding Potential: 'All I Know Is, I'm Good For My $80 Billion' - Microsoft (NASDAQ:MSFT), Oracle (NYSE:ORCL)

On Wednesday, Microsoft Corporation MSFT CEO Satya Nadella addressed Elon Musk's skepticism about the ambitious Project Stargate's $100 billion funding potential. What Happened: In an interview with CNBC, Nadella said, "All I know is, I'm good for my $80 billion," referencing Microsoft's annual investment in AI and cloud infrastructure. This allocation will ensure Azure's global capabilities continue to expand, including support for OpenAI's models, he noted. See Also: Samsung, Google Team Up On AR Glasses Development, Duo To Enter Race Against Meta And Apple "Any time a company that you've supported, and essentially were seed investor, raises money from others, it's a good day," said Nadella, when asked how this venture can benefit Microsoft. "It's a good day for OpenAI and a good day for Microsoft and our investors. Our partnership continues. We will be a tech partner to Stargate," he added. During the interview, Nadella was also asked about concerns raised by Salesforce CEO Marc Benioff regarding potential competition between Microsoft and OpenAI. In response, the Microsoft CEO reiterated that the collaboration with ChatGPT-parent is foundational and mutually beneficial. Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox. Why It Matter: The Stargate project, a joint venture between OpenAI, SoftBank Group SFTBY SFTBF, and Oracle Corp. ORCL, has drawn scrutiny over its ambitious funding goals. The venture represents a significant step in AI development and infrastructure in the U.S., with an initial private investment of $100 billion and the potential to grow to $500 billion over four years. Following President Donald Trump's announcement, Musk said, "They don't actually have the money," and later in a separate post stated, "SoftBank has well under $10B secured. I have that on good authority." When Nadella's comment reached Musk, he replied by saying, "Satya definitely does have the money." The project aims to construct data centers and power generation facilities to support advanced AI research and applications, marking a significant declaration of America's technological ambitions. In October, Microsoft reported first-quarter revenue of $65.60 billion, marking a 16% increase compared to the same period in 2023, according to data from Benzinga Pro. Check out more of Benzinga's Consumer Tech coverage by following this link. Image via Shutterstock Read Next: Squid Game Season 3: Everything You Need To Know About The Thrilling Finale Coming In 2025 Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. MSFTMicrosoft Corp$445.003.85%Overview Rating:Speculative50%Technicals Analysis660100Financials Analysis400100WatchlistOverviewORCLOracle Corp$181.685.28%SFTBFSoftBank Group Corp$54.52-11.8%SFTBYSoftBank Group Corp$34.0610.8%Market News and Data brought to you by Benzinga APIs

Microsoft relaxes data center grip on OpenAI amid $500 billion joint venture

Since 2019, Microsoft has had arrangements with OpenAI that gave the Redmond, Washington-based company the exclusive right to build new computing infrastructure for OpenAI. Microsoft, in a blog post, said it has "approved OpenAI's ability to build additional capacity, primarily for research and training of models."Microsoft on Tuesday said it has changed some key terms of a deal with OpenAI after the ChatGPT creator announced a joint venture with Oracle and Japan's SoftBank Group to build up to $500 billion of new AI data centers in the United States. President Donald Trump gathered the leaders of the "Stargate" effort at the White House on Tuesday to announce the deal, saying it was intended to help keep the United States ahead of China and other rivals in the global AI race, using chips from Nvidia. Since 2019, Microsoft has had arrangements with OpenAI that gave the Redmond, Washington-based company the exclusive right to build new computing infrastructure for OpenAI. Microsoft, in a blog post, said it has "approved OpenAI's ability to build additional capacity, primarily for research and training of models." That opened the door for OpenAI to work with Oracle. A person familiar with the deal said that Stargate is a joint venture structured as new entity in which OpenAI has an equity stake, governance rights and operational control. It will have a separate board appointed by the founding members and its own CEO, this person said. The venture will also have other investors including United Arab Emirates firm MGX. Microsoft, along with Nvidia and Arm, will be a "technology partner" in the new venture, but is not listed as an equity funder. SoftBank CEO Masayoshi Son is will be the entity's board chairman, according to a statement from OpenAI posted on social media site X. But Microsoft said that it still retains the exclusive right to offer OpenAI's API - technology shorthand for application programming interface, which is the main way that software developers and business customers buy OpenAI's services. That means Oracle will not be able to host OpenAI's primary source of revenue. Oracle did not immediately respond to a request for comment on Microsoft's statements. Microsoft said it has "revenue sharing agreements that flow both ways" with OpenAI. "The key elements of our partnership remain in place for the duration of our contract through 2030, with our access to OpenAI's IP, our revenue sharing arrangements and our exclusivity on OpenAI's APIs all continuing forward," Microsoft said. Microsoft also said "OpenAI recently made a new, large Azure commitment that will continue to support all OpenAI products as well as training," referring to Microsoft's Azure cloud computing service.

Microsoft's exclusive cloud deal with OpenAI is coming to an end

The company confirmed in a statement there would be "changes to the exclusivity on new capacity," but that it would have the right of first refusal. As part of the shake-up, OpenAI has partnered with Japan's SoftBank and America's Oracle, among others, to support its computing needs. Opening up the doors to other providers will mark a considerable change since the two companies entered into a partnership back in 2019, more than three years before the public preview of ChatGPT hit the ground running. "The key elements of our partnership remain in place for the duration of our contract through 2030, with our access to OpenAI's IP, our revenue sharing arrangements and our exclusivity on OpenAI's APIs all continuing forward," Microsoft confirmed. This means that, for at least another five years, Microsoft will have the rights to OpenAI models to power its Copilot AI tools. It also means that OpenAI's API will be exclusive to Microsoft's Azure cloud computing platform. Following around $14 billion investment into the AI company, Microsoft confirmed it remains "a major investor in OpenAI." It also reminded OpenAI had recently made a "new, large Azure commitment" which will continue to support all its products, as well as training. On the same day, OpenAI announced details of its Stargate Project, designed to support new AI infrastructure in the US. SoftBank and OpenAI will be the lead partners for the project, with Oracle and MGX also appearing as equity funders - note the omission of Microsoft. Stargate's initial technology partners will include Arm, Microsoft, NVIDIA, Oracle and OpenAI. The project will conclude with $500 billion in investments over the course of four years; $100 billion has already been earmarked for Stargate.

OpenAI struggles to price Microsoft stake in deal to become for-profit company

OpenAI's board is locked in complex negotiations to become a for-profit company, struggling to determine the price of Microsoft's stake in the start-up while holding talks to value its newly formed charitable arm at $30bn. The ChatGPT-maker, which is overseen by its not-for-profit board, has been discussing a restructuring since September that would split the start-up in two. Its charitable arm, tasked with OpenAI's original mission of "benefiting humanity", would be given a stake in the newly formed public benefit corporation (PBC). One obstacle to the conversion has been determining how much equity the start-up's biggest backer, Microsoft, would hold in the PBC, according to people with knowledge of the talks. Other considerations, such as how much equity chief executive Sam Altman will be granted in the new company, must also be ironed out. According to three people familiar with the negotiations, the charitable arm could be valued at about $30bn, but a final price is yet to be determined. The majority of that value would be realised in the form of equity in the PBC, one person added, with the remainder paid in cash. "That is a new phenomenon where non-profits have stakes in the for-profit," said Karla Dennis, chief executive of tax advisory KDA, who added that such transactions were more typically paid in cash. A restructuring will create "one of the best resourced non-profits in history", according to OpenAI. But some, including Elon Musk, argue that the true value of the non-profit is far higher, given its current control over OpenAI, which has been valued at $157bn. The switch is designed to allow OpenAI to raise tens of billions of dollars more from investors, which the start-up views as essential to develop cutting-edge AI models ahead of rivals. But it is also a major break from OpenAI's foundation as a non-profit and a highly complex move for which there is little legal precedent. OpenAI agreed a two-year time limit to complete the conversion with investors as part of its latest funding round in September. If the change is not complete by the deadline, investors can claw back some of the $6.6bn they put into the company. Of its current stakeholders, Microsoft's relationship with OpenAI is the most sensitive. Figuring out how much equity Microsoft can have without attracting antitrust attention is another crucial part of the hold-up to converting into a PBC, said one person close to OpenAI. OpenAI and Microsoft declined to comment. On Tuesday, Microsoft announced it would change the structure of its deal with OpenAI to enable the start-up to use rivals' cloud-computing services. The move means that Microsoft will relinquish its position as OpenAI's exclusive cloud service provider but retain the right of first refusal. Microsoft said several "key elements" of its partnership with OpenAI would remain in place until the end of 2030, when their current deal, including revenue-sharing arrangements, concludes. That move came as OpenAI announced this week it was joining a joint venture with Japan's SoftBank dubbed Stargate, with plans to build at least $100bn on AI infrastructure in the US. The move to become a for-profit company has proved controversial in Silicon Valley as the battle over OpenAI's future is set to influence the global race to develop and commercialise generative AI. The proposed transaction has led to vociferous lawsuits from Musk, an OpenAI co-founder who has since set up a rival group, xAI. Musk has sought an injunction against the conversion, claiming OpenAI has duped early donors, including himself, who thought they were backing a research group. OpenAI was founded as a non-profit organisation in 2015. In 2019, it developed a for-profit subsidiary, which capped returns for investors and gave the non-profit board full control over the for-profit arm. Currently, its financial future is tied to developments such as reaching artificial general intelligence (AGI), a point where the technology has similar levels of intelligence to humans. Clauses relating to AGI are being written out of the new structure, the Financial Times has previously reported. The company's complex corporate governance came under scrutiny in November 2023, when its non-profit board ousted Altman, only for him to be reinstated soon after. People close to the negotiations are hopeful the transaction can be completed this year, but added that the conversations are subject to change and likely to carry on for some months. The complexities of pricing such a nascent and powerful technology is another issue. That decision falls on OpenAI's board, which includes Altman, former Salesforce chief Bret Taylor and former US Treasury secretary Larry Summers. They owe their principal duty to "humanity, not OpenAI investors", according to the start-up's charter. "There's an obvious conflict of interest for the board when it is negotiating [the value of the non-profit]. Of course, the board wants to pay as little cash as it can possibly justify," said a former OpenAI employee. "I'm not even sure a true arms-length process could resolve this conflict." Kathleen Jennings, attorney-general in Delaware where OpenAI is incorporated, has asked for more information on the deal. Jennings has said it is her responsibility to ensure the conversion is at a fair price and for the public benefit. However, OpenAI has not yet provided such details as they are still being settled internally and with stakeholders. "There's no real precedent for this," said a person with knowledge of the deliberations. "A research company that became worth $157bn."

Microsoft is no longer OpenAI's exclusive cloud provider | TechCrunch

Microsoft was once the exclusive provider of data center infrastructure for OpenAI to train and run its AI models. No longer. As part of Stargate, the company's massive new infrastructure deal with SoftBank, Oracle, and others, Microsoft says that it has signed a new agreement with OpenAI that gives it "first right of refusal" on new OpenAI cloud computing capacity. That means that, going forward, Microsoft has input into where OpenAI's models run and train in the cloud -- but it won't have the last word. "OpenAI recently made a new, large Azure commitment that will continue to support all OpenAI products as well as training," Microsoft said in a blog post. "To further support OpenAI, Microsoft has approved OpenAI's ability to build additional capacity, primarily for research and training of models." OpenAI has blamed a lack of available compute for delaying its products, and compute capacity has reportedly become a source of tension between the AI company and Microsoft, its close collaborator and major investor. In the blost post, Microsoft reiterated that "key elements" of its longstanding partnership with OpenAI remain in place through 2030, including its access to OpenAI's IP, revenue sharing arrangements, and exclusivity on OpenAI's APIs. "The OpenAI API is exclusive to Azure, runs on Azure and is also available through the Azure OpenAI Service," the blog post reads. "This agreement means customers benefit from having access to leading models on Microsoft platforms and direct from OpenAI." We've reached out to OpenAI and Microsoft for more information and will update this post if we hear back.

Microsoft Changes OpenAI Pact to Allow Use of Rival Cloud Services

Microsoft Corp. has altered its multiyear deal with OpenAI and will now let the artificial intelligence startup use cloud-computing services from rival providers, so long as the software giant doesn't want the business itself. The agreement, which runs until 2030, will give Microsoft right of first refusal when OpenAI seeks computing horsepower to train and run its AI models, Microsoft said in a statement Tuesday. Previously Microsoft was the exclusive cloud provider for OpenAI, but last year it approved a one-time exemption that enabled the startup to buy some capacity from Oracle Corp.