(Bloomberg) — In a significant move to accelerate the development of artificial intelligence, SoftBank Group Corp., OpenAI, and Oracle Corp. are joining forces to establish a $100 billion venture aimed at strengthening AI infrastructure. Announced at a White House event with President Donald Trump, the initiative is set to push the boundaries of this rapidly evolving technology.
President Trump, speaking on Tuesday, highlighted the unprecedented levels of investment the US is witnessing. Flanked by key figures such as SoftBank’s Masayoshi Son, OpenAI’s Sam Altman, and Oracle’s Larry Ellison, he expressed optimism about the venture’s potential to boost the economy. The initiative is starting with a $100 billion investment immediately, with aspirations to scale up to $500 billion. This massive fund will be directed towards developing OpenAI’s infrastructure, including data centers and physical campuses, revealed Son, who will chair the venture.
The initial capital infusion will come from SoftBank, OpenAI, Oracle, and Abu Dhabi’s state investor MGX. The first computing system’s construction will kick off in Texas, according to SoftBank. While SoftBank and OpenAI lead the charge, SoftBank will handle the finances and OpenAI will supervise operations. Technology contributions will come from Arm Holdings Plc, Microsoft Corp., Nvidia Corp., Oracle, and OpenAI.
President Trump envisages a broad strategy to maintain US leadership in AI, pledging to boost private sector investment through streamlined permitting processes and regulatory adjustments. Key tech leaders in his administration, including future AI-crypto czar David Sacks and close advisor Elon Musk, will guide these efforts.
Following the announcement, SoftBank’s shares in Tokyo surged by 11%, marking their largest single-day jump since August. Oracle saw an 11% rise in New York trading, and Nvidia’s stock climbed almost 5%. Arm, with SoftBank as its majority stakeholder, soared by as much as 18%.
The administration plans to facilitate AI development through emergency declarations and executive actions, easing construction projects and ensuring energy access. Trump and the tech leaders emphasized AI’s transformative potential in sectors such as healthcare, which could drive economic growth.
Ellison enthused about AI’s benefits, stating, “AI holds incredible promise for all of us, for every American.”
This groundbreaking project has garnered extensive support, and, as Arm’s CEO Rene Haas told Bloomberg Television, will raise capital without relying on public funds. Haas highlighted the robust backing and governmental commitment to expedite necessary permits and removal of regulatory barriers.
However, questions about the project’s precise scope remain. SoftBank’s Son, just last month, announced a $100 billion spend over the upcoming presidential term, raising queries about capital sources. There’s speculation, reported by Bloomberg, that SoftBank could engage hyperscalers in a project financing scheme, leveraging funds from tens to hundreds of billions. As of September’s end, SoftBank had ¥3.8 trillion ($25 billion) in liquid assets.
Analyst Kirk Boodry from Astris Advisory estimates SoftBank’s contribution to the project could range from $25 billion to $30 billion. He suggested that incorporating limited partners, possibly from the Middle East akin to its Vision Fund strategy, as well as potential asset sales, are viable financing strategies, confirming SoftBank’s capability to fund its share.
Yet, on the flip side, this might heighten demands for stronger yields on future SoftBank bonds, due to increasing financial pressures, noted Resona Asset Management Co.’s head of fixed income, Takashi Fujiwara.
President Trump’s Silicon Valley rapport has been noticeable with key figures like Musk, Mark Zuckerberg, Jeff Bezos, Tim Cook, and Sundar Pichai attending his recent swearing-in.
Altman from OpenAI has been striving for a global coalition to bolster AI development through enhanced chip supply and data center capacity. The company also briefed the prior administration on ambitious construction needs for massive, city-scale power-consuming data centers.
OpenAI’s latest fundraising got SoftBank’s backing, appreciating its capital accessibility and willingness to invest in power and data centers, according to OpenAI CFO Sarah Friar last month.
Ellison mentioned on Fox News that the “Stargate” project has been planned for a while, and initial data centers in Texas are underway, aiming to advance OpenAI’s future models, signaling immense investment.
As AI grows, cloud infrastructure titans like Microsoft, Amazon, and Oracle are in fierce competition to expand their data centers. Oracle’s substantial investments in this area reflect in its doubled capital expenditure goals for the fiscal year, largely driven by these infrastructure projects.
–With contributions from Jackie Davalos, Rachel Metz, Min Jeong Lee, Takahiko Hyuga, Caroline Hyde, and Ian King.
(Updates with comments from Arm CEO starting in ninth paragraph.)
