Join for quick access. Enter your email below and we'll send confirmation plus sign you up to our newsletter.
By submitting your information, you confirm you are aged 16 or over,
have read our
Privacy Policy
and agree to the
Terms & Conditions. Geographical rules apply.
Stay On the Cutting Edge: Get the Tom's Hardware Newsletter
Get Tom's Hardware's best news and in-depth reviews, straight to your inbox.
You are now subscribed
Your newsletter sign-up was successful
Join the club
Get full access to premium articles, exclusive features and a growing list of member rewards.
An account already exists for this email address, please log in.
Stargate AI data centers for OpenAI reportedly delayed by squabbles between partners — sources say OpenAI, Oracle, and SoftBank disagreed on who would have ultimate control of the planned data centers
U.S. President Donald Trump announced in January 2025 that OpenAI, Oracle, and SoftBank would invest $500 billion and build several data centers across the U.S as part of their “Stargate” AI initiative. But instead of immediately supercharging the AI buildout, it devolved into a three-way tug of war between the three partners, according to a report by The Information.
OpenAI initially wanted to forge ahead on its own so that it owned the data centers. This would help it secure its own future without depending on third-party cloud providers, which can be more expensive in the long run. However, the company’s investors reportedly balked at the massive upfront costs required to construct AI infrastructure, especially as analysts are projecting that the company could run out of cash by mid-2027. This meant that it had to go back to the negotiating table and continue the discussions with its Stargate partners. This allegedly delayed OpenAI’s plan of acquiring 10GW of compute capacity over the next three years through its two partners.
Oracle was the first to secure a deal with OpenAI by the start of the latter half of 2025, when it said that it would build a massive Stargate data center with a projected compute capacity of 2 million chips. The AI developer then promised a few months later that it would purchase $300 billion worth of compute from the cloud provider over the next five years, although it’s still unclear how the two entities will be able to afford such commitments. Oracle did make two bond offerings in the third and fourth quarters of last year, but put itself in hot water with some investors after they complained about misleading statements during the initial offering.
These agreements do not include SoftBank, though. Instead, the AI developer and Japanese financial conglomerate were still locked in talks around the same time last year. OpenAI was already planning a 1GW data center in Texas, but this was put on hold in favor of the negotiations with Oracle. When it looked at the Texas site once more, it brought on SoftBank as a partner instead of going at it alone. This wasn’t a seamless transition, though, as the two parties vied for control. Sources say that the deal was only settled after a marathon session in Tokyo at the Japanese conglomerate’s headquarters. The two parties eventually settled on a compromise — SoftBank would get to own and develop the site, but OpenAI would control its design and would have a long-term lease on the facility. Despite that, SoftBank still had to pause its planned $50 billion acquisition of data center operator Switch due to regulatory hurdles.
After months of delays, it seems that Stargate is now back on track, and the three companies are making progress on several projects. According to The Information, this isn’t exactly ideal for OpenAI, as the best-case scenario for the company is that it owns and operates all of its own data centers. Unfortunately, that is out of the question in the near future because the costs are simply too much for an institution that has yet to reach profitability. Many investors still believe in its potential, though, with the AI firm hoping to secure $100 billion in its latest funding round and hit an $800 billion valuation.
Jowi Morales is a tech enthusiast with years of experience working in the industry. He’s been writing with several tech publications since 2021, where he’s been interested in tech hardware and consumer electronics.
I do wish they hadn't appropriated Stargate, I quite liked that TV series.
Softbank sure is an interesting creature, there's some question on where they're getting the money to drop on openAI because it seems they don't have quite that much.
Softbank sure is an interesting creature, there's some question on where they're getting the money to drop on openAI because it seems they don't have quite that much.
It's a private equity firm, doing what those firms do.
Also, is that just a question in your mind, or can you cite where others have raised such questions?
Given that they're not publicly-traded, they don't have the same disclosure requirements as many other large companies. Therefore, there's a lot we simply don't know about their finances.
