(NewsNation) —President Trump announced a $500 billion private sector investment by several tech companies who have pledged to pour in big bucks to create artificial intelligence infrastructure in the U.S.
OpenAI, Oracle and Softbank will create a joint venture called Stargate, the president announced, calling the collaboration a “resounding declaration of confidence of America’s potential.”
Trump, flanked by Oracle executive chairman Larry Ellison, SoftBank CEO Masayoshi Son, and OpenAI CEO Sam Altman, said the companies would be investing billions in artificial intelligence in a Tuesday address.
Trump announces $500 billion investment in AI infrastructure
What is Stargate?
Stargate is a partnership company formed by tech companies OpenAI, Oracle, SoftBank and other financial backers that will lay the foundation for AI technology in the U.S., according to Trump.
The joint venture will start building out data centers and the electricity generation needed for the further development of the fast-evolving AI in Texas, according to the White House.
It is expected to create more than 100,000 American jobs through the creation of “AI plants” and “colossal data centers” nationwide, Trump said.
“They have to produce a lot of electricity, and we’ll make it possible for them to get that production done very easily at their own plants if they want,” Trump said.
Ellison confirmed that the first data centers are already under construction in Texas.
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The initial plans for Stargate go back to the Biden administration. Tech news outlet The Information first reported on the project in March 2024. OpenAI has long relied on Microsoft data centers to build its AI systems, but it has increasingly signaled an interest in building its own data centers.
Where is the money coming for Stargate?
Trump’s announcement has garnered some confusion as to the federal government’s financial role.
The money to move Stargate forward will come from OpenAI, which owns ChatGPT, SoftBank, Oracle and MGX, a United Arab Emirates-based investment firm focusing on AI, according to OpenAI.
SoftBank and OpenAI are the lead partners for Stargate, with SoftBank having financial responsibility and OpenAI having operational responsibility, the company said. Son will be the chairman.
The companies are expected to commit $500 billion to Stargate over the next four years. They have committed $100 billion for immediate use, with the remaining investment expected to occur over the next four years.
But not everyone is confident in the companies’ ability to pay up.
When OpenAI announced the project Tuesday on X, tech CEO Elon Musk responded to the post saying “They don’t actually have the money.” He added, “SoftBank has well under $10B secured. I have that on good authority.”
What is the AI investment plan going to do?
The tech executives explained that some of the AI software being developed would store electronic health records and allow doctors to tap into medical data as needed.
Other health features include using AI to diagnose cancer via blood tests and “design a vaccine for every individual person” to vaccinate them against cancer.
Altman also mentioned the importance of establishing artificial general intelligence in the United States. AGI is defined as “hypothetical intelligence of a machine that possesses the ability to understand or learn any intellectual task that a human being can,” according to Google.
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Could AI centers lead to energy drains?
The newer AI technology, like OpenAI’s ChatGPT chatbot, requires an unprecedented amount of power to build and maintain the tools, The Hill reported.
According to a Department of Energy (DOE) report last month, the energy demand for U.S. data centers tripled over the past 10 years and is expected to double or triple by 2028. Data centers are also projected to consume between more than 6% to 12% of the U.S.’s electricity by 2028, according to the report.
As U.S. power consumption rises from AI data centers and the electrification of buildings and transportation, about half of the country is at increased risk of power supply shortfalls in the next decade, the North American Electric Reliability Corporation said in December.
Will Stargate have any regulations?
Trump signed a slew of executive orders in his first days in office including one rescinding former President Joe Biden’s executive order that established safety guidelines to reduce the risks that generative AI poses both to consumers and national security.
Biden’s previous order had required large language models to share safety test results with the US government and tasked federal agencies with assessing potential risks.
With that guardrail gone, it is unclear how the companies will go forward.
NewsNation’s Robert Sherman and the Associated Press contributed to this report.
