Musk Was Right: SoftBank and OpenAI Struggle To Launch Stargate AI Project --- The $500 billion venture has yet to complete a single deal for a data center

“A $500 billion effort unveiled at the White House to supercharge the U.S.'s artificial-intelligence ambitions has struggled to get off the ground and has sharply scaled back its near-term plans.

 

Six months after Japanese billionaire Masayoshi Son stood shoulder to shoulder with Sam Altman and President Trump to announce the Stargate project, the newly formed company charged with making it happen has yet to complete a single deal for a data center.

 

Son's SoftBank and Altman's OpenAI, which jointly lead Stargate, have been at odds over crucial terms of the partnership, including where to build the sites, according to people familiar with the matter.

 

While the companies pledged at the January announcement to invest $100 billion "immediately," the project is now setting the more modest goal of building a small data center by the end of this year, likely in Ohio, the people said.

 

Stargate's lethargic launch is a setback to the vast ambitions of Son, who despite spending billions of dollars over the years, has been playing catch-up in the fast-evolving AI sector.

 

SoftBank committed $30 billion to OpenAI earlier this year. It is by far the largest-ever startup investment -- an enormous wager that has led SoftBank to take on new debt and sell assets. The investment was made alongside the plans for Stargate, giving SoftBank a role in the physical infrastructure needed for AI.

 

Altman, eager to secure the computing power to support the next generations of his company's signature product, ChatGPT, has plowed ahead without SoftBank, signing deals for data centers with other operators.

 

The leaders of both companies said all is well in their joint effort. Last week they appeared on video at a SoftBank event, and Altman said they have an initial goal of building 10 gigawatts of data centers together. It is a "wonderful partnership," he said.

 

In a joint statement, the two companies said they were advancing projects in multiple states and were "moving at hyperscale and speed to deliver the AI infrastructure that will power the future and serve humanity."

 

Stargate's rocky start hasn't slowed the data-center development spree that Trump, a Republican, has said is a national priority. AI enthusiasts said the world will require a gargantuan effort to build the warehouse-like structures filled with computer servers -- and the electricity needed to supply them -- on par with the construction of railroads in the 19th century.

 

Altman's OpenAI recently struck a behemoth data center deal with Oracle that calls for OpenAI to pay more than $30 billion a year to the software and cloud computing company starting within three years, according to people familiar with the transaction.

 

That deal, which doesn't involve SoftBank, totals 4.5 gigawatts of capacity, and would consume the equivalent power of more than two Hoover Dams, enough to power around 4 million homes. The data centers are spread between multiple locations around the country, people familiar with the deal said.

 

Taken with a smaller deal OpenAI struck with Coreweave, OpenAI has now completed data-center deals for nearly as much capacity as Stargate promised for this year in January.

 

(OpenAI has said $100 billion roughly equates to 5 gigawatts of data centers.)

 

Despite Stargate's slow start, Son has told associates he is bullish on OpenAI and would like to invest even more in the company, a person familiar with the matter said.

 

Son has long craved a prominent seat at the AI table. Over the past decade, he devoted the two largest startup funds ever raised -- over $140 billion -- to finding the AI companies of the future, only to miss out on OpenAI and all of its competitors before the launch of ChatGPT, while being tarred by high-profile flops such as WeWork and construction startup Katerra.

 

He had better success with his 2016 acquisition of chip company Arm, which surged in value in the past two years.

 

In the fall, he zeroed in on OpenAI. Altman had ambitions on a scale without precedent -- he has said trillions of dollars will be needed to fund the next stages of AI. In November, Son and Altman met in Tokyo to hash out an agreement -- then brought their plans to Trump aides with the offer of announcing a giant U.S. investment. On the second day of Trump's new administration, they stood smiling in White House next to Trump, vowing to spend $500 billion by 2029.

 

"This is the beginning of our golden age," Son said from the podium in the White House.

 

OpenAI and SoftBank each pledged $18 billion to the venture to get started, which they expected would develop data centers and then lease them to OpenAI.

 

The two companies said they would jointly control the entity -- with Son as its chairman -- with SoftBank focusing on the financial details and OpenAI on the operations.

 

They named Oracle and U.A.E. firm MGX as partners in the initial announcement, but their role was unclear. No agreement setting out their investment levels had been at the time reached.

 

"Stargate is not formed yet," Oracle CEO Safra Catz said on an investor call last month.

 

One recent complication between OpenAI and SoftBank has been over how extensively to build data centers on sites tied to SB Energy, a SoftBank-backed energy developer, according to people familiar with the matter.

 

Altman has used the Stargate name, shared with a 1994 Kurt Russell film about aliens who teleport to ancient Egypt, on projects that aren't being financed by the partnership between OpenAI and SoftBank. The trademark to Stargate is held by SoftBank, according to public filings.

 

For instance, OpenAI refers to a data center in Abilene, Texas, and another it agreed in March to use in Denton, Texas, as part of Stargate even though they are being done without SoftBank, some of the people familiar with the matter said.

 

Building data centers isn't easy. Companies need to find sites, develop the physical structures -- or pay another company to do that -- buy expensive AI chips, source vast loads of electricity and find lenders to cover much of the cost, among other details. Stargate is hoping to use a new, lower-cost design for its first project in Ohio, people familiar with the matter said.

 

Training new, better AI models requires evermore data processing, which means companies including OpenAI are committing to larger and larger spending well before the business models of AI companies have proved profitable.

 

OpenAI's $30-billion-a-year deal with Oracle is roughly three times as much as what Altman's company has recently projected in annual revenue. The company, which is losing billions of dollars a year, is betting its revenue will multiply because of the growing ranks of paying customers and advertising, allowing it to pay for its hefty commitments.” [1]

 

In the fall, Son zeroed in on OpenAI. Like Musk: many zeroes in, one zero out. Altman used Son to impress Trump with huge AI infrastructure deal. Now Altman is putting Son under the bus, like he did with Musk. Altman is making deals with others, who are outcompeting Son.

 

In the fall, Masayoshi Son, CEO of SoftBank, focused on OpenAI as a significant investment opportunity, aiming for SoftBank to become a key player in the AI landscape

 He had previously missed out on being an early investor in OpenAI and its competitors despite having raised large startup funds dedicated to AI companies.

In January 2025, Sam Altman, CEO of OpenAI, partnered with Son and Larry Ellison of Oracle to announce the Stargate project at the White House alongside President Donald Trump. The project, with Son as chairman, aimed to build AI infrastructure in the US, with an initial investment of $100 billion and a goal of $500 billion over four years. Trump, keen on promoting US AI leadership and attracting investment, embraced the project, potentially creating an impression of his support for the initiative.

Reports suggest a potential strain in the OpenAI-SoftBank partnership, with disagreements regarding Stargate's implementation, such as the location of data centers. OpenAI and Oracle have recently announced an expansion of the Stargate project, adding 4.5 gigawatts of data center capacity in the US, further solidifying the partnership between these two entities. However, it is unclear if Son or SoftBank are included in this latest expansion. While Son and Altman stood together with President Trump at the initial announcement of Stargate, some reports indicate that the project has struggled to make progress since its unveiling in January.

The comparison to Elon Musk is relevant as he is a prominent critic of OpenAI, including its shift towards a for-profit structure and its partnership with Microsoft. Musk has publicly questioned the Stargate project and its funding. Altman, in turn, has responded to Musk's criticisms by suggesting that Musk prioritize American interests over his own companies.

It's important to note that the long-term dynamics and potential outcomes of these partnerships and rivalries remain to be seen. The AI industry is rapidly evolving, with strategic moves and shifting alliances continually shaping the competitive landscape.

 

1. Musk Was Right: SoftBank and OpenAI Struggle To Launch Stargate AI Project --- The $500 billion venture has yet to complete a single deal for a data center. Brown, Eliot; Berber, Jin.  Wall Street Journal, Eastern edition; New York, N.Y.. 22 July 2025: A1.