Can Masayoshi Son, President Trump, and OpenAI's 'Stargate Project' really be carried out?

On January 22, 2025, OpenAI, which develops 'ChatGPT' and other services, announced that it has launched the 'Stargate Project' in collaboration with SoftBank, Oracle, and MGX to invest $500 billion (approximately 78.3 trillion yen) over the next four years to build a new AI infrastructure in the United States. This is a huge amount of investment in AI, but where on earth will the $500 billion come from and who will benefit from this project? Investment writer M.G. Ziegler considered this.

'Stargate' Squares Some AI Circles

Announcing The Stargate Project

The Stargate Project is a new company which 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. This infrastructure will secure…

— OpenAI (@OpenAI) January 21, 2025

The Stargate Project is a plan to build a new AI infrastructure for OpenAI in the United States, with $500 billion to be invested over the next four years. OpenAI will be responsible for the operation of the project, SoftBank will be responsible for its finances, and SoftBank's Masayoshi Son will serve as the project's first chairman.

OpenAI and SoftBank announce 'Stargate' project to establish AI data center with investment of over 70 trillion yen - GIGAZINE

When asked why four years, Ziegler said, 'Of course, it's the length of President Donald Trump's term,' and this point is clear. On the other hand, Ziegler questioned OpenAI's statement that it would 'invest $500 billion' and 'inject $100 billion (about 16.7 trillion yen) immediately after the announcement' to launch Stargate, and explained his own theory on 'where the money will come from.'

Ziegler began by pointing out, 'Stargate's initial investors have been announced as SoftBank, OpenAI, software company Oracle, and investment firm MGX. Some of the $100 billion will be provided in exchange for shares, with SoftBank and MGX likely to be the two biggest players. However, it doesn't appear that either has enough capital on hand to match a $100 billion commitment, let alone $500 billion.'

He added, 'SoftBank has about $30 billion in cash, and MGX has committed some of its $100 billion to OpenAI. Oracle has only about $11 billion in cash, and OpenAI is a cash-burning machine at the moment. So we can assume there are other sources of funding, probably via SoftBank (and/or MGX), to secure the $100 billion.'

It's unclear what the other funding source might be, but Ziegler said it's possible it could come from some of SoftBank's $150 billion in debt.

According to The Information , OpenAI and SoftBank will each invest $19 billion in Stargate, giving each company a 40% stake in the company.

This plan has provided OpenAI with ample funding, but Ziegler points out that OpenAI has also benefited from something other than funding: maintaining its relationship with Microsoft, a former major investor in OpenAI.

OpenAI has selected Arm, Microsoft, NVIDIA, and Oracle as its major initial technology partners, and is building data centers and other bases, starting with Texas. OpenAI also emphasizes its strong relationship with Microsoft, saying, 'This builds on the existing partnership between Microsoft and OpenAI. OpenAI will continue to increase its use of Microsoft Azure. As OpenAI continues to collaborate with Microsoft to train key models and provide superior products and services, Azure usage will continue to grow.'

Regarding this matter, Ziegler said, 'The above OpenAI statement was made just to let the world know that Microsoft and OpenAI have not broken up. Microsoft, which has supported OpenAI through its financial difficulties, is free to approve or disapprove of OpenAI like a parent, but in this case, a favorable agreement has been reached. The two companies have been under immense strain under the pressure of AI, the fastest growing technology in history, and have clearly drifted apart until now. This agreement will relieve some of that pressure. OpenAI will be able to rely on data centers and cloud providers other than Microsoft, and Microsoft will be able to maintain its own IP rights and business model needs through OpenAI's APIs and models.'

Finally, Ziegler said, 'Donald Trump was able to get a quick political victory over technology and AI with a big amount of money and a big company. And OpenAI can continue to operate entirely in the United States without having to build AI infrastructure with overseas partners. At least for now. OpenAI breaks away from its exclusive data center contract with Microsoft, Oracle gets OpenAI's business, SoftBank gets to promote the initiative it had already announced with President Trump, and MGX gets a way to double, triple, and quadruple its focus on AI, especially OpenAI. Microsoft can maintain its partnership with OpenAI without having to worry about financing, and it can protect its business and technology,' he said, pointing out that this partnership is a win-win situation.

Elon Musk, who is developing AI with 'xAI' and other companies, posted on social media that 'the participating companies don't actually have any money, and SoftBank's funding is less than $10 billion.' However, OpenAI CEO Sam Altman immediately responded by saying that this was wrong.

Wrong, as you surely know.

want to come visit the first site already under way?

this is great for the country. i realize what is great for the country isn't always what's optimal for your companies, but in your new role i hope you'll mostly put 🇺🇸 first.

— Sam Altman (@sama) January 22, 2025