Will Stargate give America an AI advantage over China?

A $500bn project involving key industry players is designed to build the gargantuan infrastructure needed to support the expansion of the AI revolution. For the US president, it is also about winning.

Sebastien Thibault

Will Stargate give America an AI advantage over China?

Marco Mossad

last update on 01 Feb 2025

In the flurry of announcements in the hours and days after Donald Trump returned to the White House, one caught the eye perhaps more than others, not least for the staggering sums involved.

Stood alongside some of the most influential people in global technology, Trump announced the launch of Stargate, a whopping $500bn investment programme designed to transform America’s Artificial Intelligence (AI) industry.

Those tech leaders were Masayoshi Son of Japan’s SoftBank Group, Larry Ellison of Oracle, and Sam Altman of OpenAI, the company behind ChatGPT. It let Trump wax lyrical about the United States’ global leadership in this most important area.

Elements of the project—most notably SoftBank’s $100bn commitment—were disclosed prior to the inauguration, during the transitional period between Trump’s election victory and his formal assumption of office. Further details will emerge in the coming weeks.

Shmoozing the industry

In some ways, the Stargate investment programme highlights the confidence of tech firms in the US, which could be set for an economic boom as a result, with resulting job opportunities. Trump hopes it will give the US the advanced technological capabilities needed to keep ahead of China.

Trump had already won over many in the AI community by issuing an executive order repealing a 2023 Biden administration rule mandating AI companies to report any potential threats to national security, public health, or safety arising from AI developments.

Advocates argue that a rollback of regulatory safeguards will foster innovation and create a business-friendly environment that attracts investment. Critics warn that it may come at a cost, undermining protections designed to mitigate risk.

Julia Demaree Nikhinson/AFP — CEO of Meta Mark Zuckerberg, Google Sundar Pichai and Tesla and SpaceX CEO Elon Musk attend Donald Trump's inauguration ceremony in the US Capitol Rotunda in Washington, DC, on January 20, 2025.

Playing to strengths

The three industry giants who stood alongside Trump will bring different things. OpenAI is a leader in AI innovation, SoftBank specialises in technology investments, and Oracle focuses on cloud computing solutions and data management. Financial responsibility for Stargate will lie with SoftBank, whereas operational responsibility will sit with OpenAI.

The technology is set to tackle some of the most critical global challenges, not least by pushing advances in healthcare, including using algorithms to discover new medicines and improve diagnostics. But AI is also hungry for both power and data, meaning that it needs a mammoth infrastructure to support its expansion.

Stargate's first phase includes the construction of 10-20 state-of-the-art data centres. The first will be built at Oracle's existing data centre campus in Abilene, Texas, which is set to become Stargate's 'home'. It could soon be the largest cluster of data centres in the world. Yet not everyone is enthused.

Elon Musk, the entrepreneur and world's richest man who now has the ear of the president, noted that SoftBank had secured only $10bn to date—a far cry from the project's lofty goals. Altman dismissed Musk's claims as unfounded. Musk has also warned that AI needs more safeguards, not less.

Commercial partnerships

The three main companies involved already have pre-existing commercial partnerships, which may complicate the mechanics of Stargate. OpenAI has entered a collaboration with American semiconductor manufacturer Broadcom and Taiwanese peer TSMC to develop a proprietary internal chip optimised for its systems, slated for release by 2026.

AI tech is hungry for both power and data, meaning that it needs a mammoth infrastructure to support its expansion

Moreover, OpenAI's partnership with Microsoft—established in 2019 and set to continue until at least 2030—grants Microsoft exclusive rights to integrate OpenAI's models and technologies into its Azure cloud platform. Likewise, Azure acts as OpenAI's exclusive cloud provider and the infrastructure on which OpenAI trains and refines its models.

With OpenAI delivering its advanced models exclusively on Azure, this gives Microsoft a competitive advantage over AI rivals such as Amazon and Google. It is a symbiotic relationship. Microsoft gets to strengthen its cloud infrastructure, while OpenAI gains substantial financial backing from Microsoft, allowing it to develop new capabilities.

Microsoft plans to spend $80bn this year developing data centres dedicated to training and enhancing AI models, so Stargate could complicate things, given that OpenAI is involved with both projects. Working with Stargate while maintaining its exclusivity agreement with Microsoft may throw up challenges.

In an interview with CNBC during the Davos summit, Microsoft chief executive Satya Nadella said the company was happy with its partnership with OpenAI, adding that the success of its partners directly benefits Microsoft. He added that Microsoft was developing its own proprietary AI models.

Sebastien Thibault

In a sign of the global AI industry's interconnectedness, SoftBank has also invested heavily in OpenAI, contributing $500mn during its latest funding round. OpenAI's involvement in Stargate naturally implicates Microsoft as a stakeholder, even if the latter makes no direct investments in the initiative.

Beware of Beijing

Trump's strategic priorities have one eye on China, whose technological advances continue to threaten US dominance. A global AI power ranking compiled by the Stanford Institute for Human-Centred Artificial Intelligence recently put the US first, China second, and the UK third.

Yet, in recent days, world news has been dominated not by Stargate but by a small Chinese AI start-up whose DeepSeekV3 large language model (LLM) shot to the top of Apple's app downloads over the weekend. It excels in programming, translation, and text generation and has surpassed Meta's LLaMA 3.1 in performance tests.

Remarkably, DeepSeekV3 was developed for just $5.5mn over two months, trained on extensive datasets using Nvidia H800 processors collected by US export restrictions to China took effect. By contrast, Altman said the cost of training ChatGPT-4 was more than £100mn. News of such a cost-effective breakthrough wiped hundreds of billions of dollars off the value of US tech stocks.

Trump has one eye on China, whose technological advances continue to threaten US dominance

International effort

In the face of China's tech ascendency, Stargate stands as a strategic American response. Trump not only wants to bolster domestic infrastructure and attract the world's top talent but also to prevent the leakage of sensitive data and technologies to America's top rival.

The Middle East is playing a role in global AI development via its significant investment from sources such as Saudi Arabia's Public Investment Fund (PIF) and the UAE's Mubadala. They have collectively invested $60bn in SoftBank. Both countries have also invested directly into OpenAI.

The US-Gulf partnership yields mutual benefits. For Washington, such alliances help counter China's growing technological influence. For Gulf states, access to cutting-edge technology supports their economic ambitions to diversify and modernise.

For now, Trump's second term is steaming ahead with a clear emphasis on fortifying America's technological leadership. By prioritising the development of AI infrastructure and removing barriers to innovation, he aims to keep the US ahead. It is certainly a race of historic significance. Stargate may be just what its name implies: a gateway to the stars.

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