| | | | | By Jeff Brown, Editor, The Bleeding Edge | | | | Stargate was announced in March 2024. | | It was astounding in its scale and ambition. Nothing like it had ever been suggested before. | | Stargate is a U.S.-based supercomputer – an AI factory – behind which are Microsoft and OpenAI with a planned investment of at least $100 billion… and potentially $115 billion. | | Announcing a $1 billion data center to train and run AI models was perceived to be a big deal at the time. The March 2024 announcement was 100 times larger. And it was being built in the most unlikely of places: on hundreds of acres of agricultural fields in Mount Pleasant, Wisconsin. | | | | And the development was so significant, I had to see it for myself. | | Boots on the Ground | | My team and I packed up the car and hit the road – the only way to do research, really. Literally, my boots on the ground… | | | | Below is a picture of me with the Stargate facility under construction in the background. The cranes and construction equipment were everywhere, and crews were still working despite it being past 7 at night. It was already so large, it was impossible to capture all of it in the photograph. | | | | The purpose of Stargate was simple: Aggregate enough computational horsepower made up of bleeding-edge semiconductors, provide it with enough electricity, and develop an artificial general intelligence (AGI). | | While the project was well under construction, it hadn't been commissioned yet. And naturally, something of this scale is built in phases. | | Phase 4 – scheduled to begin operation in 2026 – is a precursor to Phase 5, "Stargate with all portals to the future" operational. | | But then, something occurred just after the New Year that gave me pause. | | Microsoft announced it was pausing construction on certain parts of this massive AI infrastructure project. | | Specifically, the company said this… | | | We have paused early construction work for this second phase while we evaluate scope and recent changes in technology and consider how this might impact the design of our facilities. | | | | This was a surprise because I knew that Microsoft and OpenAI weren't slowing down their research and development in AI. If anything, both companies were speeding up. | | Microsoft has increased its forecasted spend on AI investment looking into this year and next, and OpenAI raised another $1.5 billion in a venture capital round last November – it has raised almost $24 billion to date. | | What was it? Why the pause? | | My best guess at the time was some kind of shift in investment towards another project, and the timing couldn't have been a coincidence with an inauguration right around the corner… | | Of course, with time, we found the answer in just a few weeks. | | Government-Sanctioned | | Yesterday, President Trump announced a new $300 billion private sector investment to build Project Stargate with the support of Masayoshi Son of Softbank, Larry Ellison of Oracle, and Sam Altman of OpenAI. Microsoft's CEO, Satya Nadella, was noticeably absent. | | | | Project Stargate announcement | Source: Instagram @POTUS | | As if the original $100 billion project in Wisconsin wasn't enough, Project Stargate, a newly formed company, will be a minimum of $300 billion and up to $500 billion in investment – as much as five times the projected amount originally intended for the Mount Pleasant AI factory in early 2024. | | Clearly, some things have changed between OpenAI and Microsoft, as Microsoft is not one of the investors in Project Stargate, which will be located in Texas. While Microsoft will be a technology partner of Project Stargate, it doesn't have equity in the company. | | Softbank, OpenAI, Oracle, and MGX are the initial equity funders of the company, with Softbank and OpenAI as the lead partners. Softbank's Masayoshi Son will be the chairman. | | ARM (ARM), Microsoft (MSFT), Oracle (ORCL), and OpenAI are named as the key technology providers. | | The construction is already underway in Texas, and Sam Altman (OpenAI) has suggested that there will be other AI factories as part of Project Stargate in other locations throughout the U.S. | | So what of Mount Pleasant? My working assumption is that it is likely that the Mount Pleasant, WI, location will eventually become part of Project Stargate. | | The one name on Project Stargate's equity list that very few had heard of is MGX. | | Fast money assumed that MGX was a ticker symbol and quickly ran up the price after hours yesterday in Metagenomi (MGX) – a small, early-stage biotech company that went public early last year and is focused on CRISPR-based genetic editing therapies primarily targeting the liver. | | | | Metagenomi has nothing to do with Project Stargate. The stock had been down more than 80% since its IPO and sits at roughly a negative $100 million dollar valuation while having $274 million in cash. And yet, the stock opened up 33% higher this morning… how's that for dumb money? | | For those in the know, the "real" MGX is a venture capital fund based in Abu Dhabi, UAE. It was founded by Mubadala (the sovereign wealth fund of the UAE) and another AI-centric investment fund, G42, about a year ago. | | G42 is a much smaller partner in MGX, and it was foundationally funded by Mubadala. But here's where it gets interesting… | | | Microsoft's Back Door | | Microsoft invested $1.5 billion into G42 (the smaller partner in MGX) in March 2024, so Microsoft actually has equity exposure to Project Stargate through its investment in G42. | | I wouldn't be surprised to see Microsoft eventually be "let in" to Project Stargate at some future date; but I suspect it was blocked by Oracle in the initial funding round, as they are fierce competitors and Oracle has been hell bent on increasing its business in the cloud computing space, especially related to AI. | | Project Stargate is unique in that it is a national project with stated objectives of leading the world in artificial intelligence (AI) technology and using that technology to cure human disease, advance national security, and grow U.S. GDP… while at the same time, it will be funded entirely by the private sector. | | In other words, it won't cost U.S. taxpayers anything. | | The initial investment will be $100 billion with the plan to reach $500 billion over the next four years. That equates to $125 billion in new AI infrastructure spend in just the next four years. | | Elon Musk was openly critical of the Project Stargate announcement, questioning whether or not the money was there. That felt like a bit of competitive angst to me, given Musk's initiatives with his own AI factory, Colossus, at xAI outside of Memphis, Tennessee. | | With that said, Softbank has a strong history of being able to raise massive amounts of capital in excess of $200 billion for its venture funds. OpenAI has already raised about $24 billion. Oracle has $11 billion in cash and will generate more than $10 billion in its next fiscal year. And MGX is a $100 billion fund. | | The money is there, and these companies will be able to raise even more for a project with this kind of profile. | | The reality is that it's all heating up, not cooling down. | | In 2023, a $1 billion AI data center was a massive deal. By 2024, it became $100 billion with OpenAI and Microsoft. And now, a single project – Project Stargate – has been announced as a $500 billion AI project. | | I know these numbers are hard to comprehend. But the scale is easy to understand. From $1 billion to $500 billion, a 500X increase in investment for a single project. | | It won't be long before the first $1 trillion AI deal is announced. | | Whatever it takes to get to artificial general intelligence. | | Jeff | | | | | | | JFK's vision inspired millions who wanted to pursue careers in science and engineering… Trump's mission to Mars will do... | | | | | | Increasing levels of energy consumption are necessary for a civilization to advance. | | | | | | This week, we received an interesting question about the risk that AI training will reach a dead end or... | | | | | | | | | | | | | | | To ensure our emails continue reaching your inbox, please add our email address to your address book. 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