OpenAI's $500B Stargate AI data centers stall as partners clash over ownership and control

Stargate AI data centers for OpenAI reportedly delayed by squabbles between partners -- sources say OpenAI, Oracle, and SoftBank disagreed on who would have ultimate control of the planned data centers

Sources say that Stargate has been stalled due to squabbles between stakeholders over site ownership and system control. U.S. President Donald Trump announced in January 2025 that OpenAI, Oracle, and SoftBank would invest $500 billion and build several data centers across the U.S as part of their "Stargate" AI initiative. But instead of immediately supercharging the AI buildout, it devolved into a three-way tug of war between the three partners, according to a report by The Information. OpenAI initially wanted to forge ahead on its own so that it owned the data centers. This would help it secure its own future without depending on third-party cloud providers, which can be more expensive in the long run. However, the company's investors reportedly balked at the massive upfront costs required to construct AI infrastructure, especially as analysts are projecting that the company could run out of cash by mid-2027. This meant that it had to go back to the negotiating table and continue the discussions with its Stargate partners. This allegedly delayed OpenAI's plan of acquiring 10GW of compute capacity over the next three years through its two partners. Oracle was the first to secure a deal with OpenAI by the start of the latter half of 2025, when it said that it would build a massive Stargate data center with a projected compute capacity of 2 million chips. The AI developer then promised a few months later that it would purchase $300 billion worth of compute from the cloud provider over the next five years, although it's still unclear how the two entities will be able to afford such commitments. Oracle did make two bond offerings in the third and fourth quarters of last year, but put itself in hot water with some investors after they complained about misleading statements during the initial offering. These agreements do not include SoftBank, though. Instead, the AI developer and Japanese financial conglomerate were still locked in talks around the same time last year. OpenAI was already planning a 1GW data center in Texas, but this was put on hold in favor of the negotiations with Oracle. When it looked at the Texas site once more, it brought on SoftBank as a partner instead of going at it alone. This wasn't a seamless transition, though, as the two parties vied for control. Sources say that the deal was only settled after a marathon session in Tokyo at the Japanese conglomerate's headquarters. The two parties eventually settled on a compromise -- SoftBank would get to own and develop the site, but OpenAI would control its design and would have a long-term lease on the facility. Despite that, SoftBank still had to pause its planned $50 billion acquisition of data center operator Switch due to regulatory hurdles. After months of delays, it seems that Stargate is now back on track, and the three companies are making progress on several projects. According to The Information, this isn't exactly ideal for OpenAI, as the best-case scenario for the company is that it owns and operates all of its own data centers. Unfortunately, that is out of the question in the near future because the costs are simply too much for an institution that has yet to reach profitability. Many investors still believe in its potential, though, with the AI firm hoping to secure $100 billion in its latest funding round and hit an $800 billion valuation. Follow Tom's Hardware on Google News, or add us as a preferred source, to get our latest news, analysis, & reviews in your feeds.

Stargate delays push OpenAI to seek cloud compute alternatives

OpenAI is scrambling to secure computing power after its Stargate data center venture stalled, turning to cloud partners and alternative hardware to fill the gap, according to The Information. Gridlocked from the start Stargate -- a US$500 billion joint project with Oracle and SoftBank, announced at the White House in early 2025 -- was designed to deliver 10GW of AI computing capacity. More than a year on, the venture remains largely dormant. No dedicated team exists, no facilities are under development, and disagreements over leadership, structure, and financial responsibility have left the partnership gridlocked. The debt dead end OpenAI initially looked to build and own its own data centers. Executives scouted US sites and explored raising billions in debt to fund large-scale campuses. Lenders balked, however, wary of backing a cash-burning company without a proven long-term business model. OpenAI shelved those plans. Pivoting to partnerships In July 2025, OpenAI struck a landmark deal with Oracle to jointly develop 4.5GW of data center capacity across multiple US sites. The two companies share construction risks and cost overruns, giving OpenAI a say in facility design without the full capital burden. OpenAI has since deepened its cloud reliance. Reuters reports the company signed additional compute deals with Amazon Web Services and Google Cloud to cover near-term shortages. Bloomberg, meanwhile, says OpenAI is also moving beyond Nvidia chips, partnering with AMD and AI accelerator startup Cerebras for alternative hardware supply. Falling short -- and spending more Despite these moves, OpenAI missed its target of locking in 10GW of capacity by the end of 2025, securing only about 7.5GW. The shortfall hit its finances hard. The company revised its projected compute spending through 2030 from US$450 billion to US$665 billion. At the World Economic Forum in Davos, OpenAI CFO Sarah Friar confirmed the shift, saying the company is prioritizing partnerships to keep its balance sheet lean. Building its own facilities remains a long-term goal -- not an immediate one. Competition closes in The reset comes as rivals move fast. According to The Wall Street Journal, Google DeepMind and Anthropic have rapidly expanded their computing footprints, raising fears that OpenAI's delays could erode its technological edge. To regain ground, OpenAI hired former Intel executive Sachin Katti to lead its infrastructure organization. The Information says the appointment is aimed at tightening control over its compute roadmap and data center design. For now, OpenAI's strategy is control without ownership: locking in priority access, custom designs, and long-term capacity -- while letting partners carry the financial weight.

'Hardware Is Hard,' Elon Musk Says As OpenAI's $500B Stargate Data Center Project Stalls - Oracle (NYSE:ORCL)

Elon Musk responded to reports the $500 billion Stargate data center venture has effectively stalled, saying, "Hardware is hard" and "Those who have tried to do so at scale will understand." Stargate Has No Staff And No Clear Role The Information reported that the Stargate joint venture, announced at the White House in January 2025 alongside SoftBank and Oracle (NYSE:ORCL), has not meaningfully staffed up and currently plays no direct role in building OpenAI's data centers. The original pitch was enormous: $500 billion for 10 gigawatts of AI computing capacity, with $100 billion deployed immediately. More than a year later, according to the report, no dedicated team exists and disagreements over leadership, structure and financial responsibility have left the partnership gridlocked. OpenAI and SoftBank clashed over control of key Texas data center sites. After months of negotiation, they compromised: OpenAI leases and designs the facility, SoftBank's energy arm develops and owns it. The Race For Compute The AI infrastructure arms race is moving fast, with or without Stargate. Anthropic, meanwhile, announced a $50 billion data center buildout with Fluidstack in Texas and New York last November, with sites coming online this year. What Polymarket Is Saying Polymarket traders are increasingly skeptical of OpenAI's position in the AI race. The "best AI model end of June" market on Polymarket gives OpenAI just a 11% chance of holding the top-ranked model, behind Google at 40% and Anthropic at 35%. On the IPO front, Polymarket's "OpenAI IPO by..." market puts a 49% chance on a public offering by the end of 2026. Polymarket traders currently think there's a 52% chance Elon wins the trial. Upcoming Earnings Oracle reports Q3 earnings on March 10. Nvidia (NASDAQ:NVDA), whose chips underpin virtually every one of these data center projects, reports next on May 28. Both stocks are likely to move on any changes to the AI infrastructure spending outlook. Image: Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.