Alien Road: What on Earth is Stargate?

One of the most groundbreaking announcements from the Trump administration so far has been the unveiling of “Stargate.” This revelation has sent Oracle’s shares soaring by 13% in less than 24 hours and has sparked widespread discussion among analysts about its potential impact across various industries.

So, what exactly is Stargate? In essence, it’s a privately funded, large-scale supercomputer initiative that builds upon existing projects—without utilizing taxpayer dollars. Stargate is a collaborative effort involving Oracle, OpenAI (a private entity), and Japan’s SoftBank. Together, they have committed an initial investment of $100 billion into a newly formed U.S. company, with plans to inject up to $500 billion over the next four years.

The primary focus of this new company? The development of cutting-edge data centers, with ten facilities already under construction in Abilene, Texas, according to Oracle’s co-founder, Larry Ellison. This infrastructure expansion is expected to benefit companies involved in construction materials, such as CRH, Cemex, and Holcim. However, according to RBC analysts, these firms only derive 3-4% of their total revenue from Texas, which explains the relatively modest market reaction so far.

The real excitement, however, lies in the technology sector. The name “Stargate” refers to an AI supercomputer that these data centers will support. As reported by The Information in March, this project is expected to cost over $100 billion and take approximately five to six years to complete—making it significantly more expensive than existing supercomputers. UBS analysts estimate that the system could eventually incorporate “well over a million” GPUs.

The biggest winners from the announcement are Arm Holdings, which will serve as a “key initial technology partner” alongside NVIDIA and Microsoft. Arm’s stock has skyrocketed by 16% today and an astonishing 45% since the beginning of the year. SoftBank remains Arm’s majority owner, and its CEO, Masayoshi Son, will chair the new company. Son, who previously met with Trump to discuss the initiative, has committed to creating 100,000 jobs in the U.S.—a move that has already generated significant market value.

Stargate’s immense energy demands are also drawing attention. Some experts believe it may require nuclear-scale energy solutions to sustain its operations. “We anticipate further regulatory reforms and federal investments, particularly in nuclear energy,” wrote Ed Mills of Raymond James in a recent report.

Initially, the project was anticipated to be a joint venture between OpenAI and Microsoft, long-standing partners. However, yesterday’s announcement revealed a surprising twist—Stargate will involve multiple stakeholders, including international financiers such as the Middle Eastern AI fund MGX. This development has effectively ended Microsoft’s exclusivity as OpenAI’s cloud provider.

Despite this shift, Microsoft analysts remain optimistic. According to Wells Fargo’s Michael Turrin, Microsoft retains the right of first refusal on all new OpenAI compute projects, which benefits both parties. Microsoft shares have risen 3% today, with expectations that the company can now focus on high-margin or consistent compute tasks, optimize capital expenditure, and diversify its revenue streams.

Ultimately, Stargate signifies an ambitious push by President Trump to rally tech leaders around a monumental supercomputer initiative aimed at maintaining the U.S.’s competitive edge in the AI race. As reported by Deirdre Bosa, the urgency of this initiative comes in response to the rapid progress of China’s “DeepSeek,” which has reportedly developed a competitive AI model for less than $6 million in just two months using cost-effective GPUs.

In contrast to the Biden administration’s $550 billion taxpayer-funded Infrastructure Investment and Jobs Act, Stargate stands as a private-sector-driven alternative. Analysts at RBC note that the initiative is slightly smaller than anticipated, which explains the muted response in materials stocks. However, Macquarie suggests it remains bullish for power infrastructure firms—bringing a traditionally Democratic-leaning sector into Republican alignment.

In summary, Stargate provides a glimpse into the rapidly evolving landscape of the U.S. economy and its technological ambitions.