Unveiling the $500 Billion Stargate Project: A New Era for AI Infrastructure
In a groundbreaking announcement, President Trump introduced the Stargate Project during a news conference on Tuesday. Touted as the largest AI infrastructure project in history, this initiative promises to reshape the landscape of artificial intelligence in the United States. With the backing of industry giants like OpenAI, Oracle, and Softbank, the project aims to invest up to $500 billion in building data centers across the nation, with an initial $100 billion slated for this year alone.
This announcement follows the rescinding of former President Biden’s executive order on AI, which was designed to increase safeguards for the technology. The Stargate Project, however, is set to propel the U.S. into a new era of AI dominance, according to its proponents.
AI Experts Weigh In
Tech consultant Shelly Palmer is optimistic about the Stargate Project, suggesting it will provide the U.S. with a strategic advantage and unforeseen benefits. He states:
As for the 100,000 jobs the project is supposed to create? Some construction jobs will be created as the data centers are built, but many more (millions more) will be created as the data centers come online. We’ve never had a compute cloud like this—there’s literally no way to calculate the economic impact of this amount of AI compute. It will be massive.
There are many tech skeptics, and it has become fashionable to denigrate and vilify big tech. To me, the Stargate Project is the first step in securing the future of the U.S. economy as well as our digital and cyber security. Every business will benefit from the power and promise of AI, and—like it or not, believe it or not—warfare will be dominated by AI. Today, the U.S. has a clear lead. The Stargate Project will help ensure it stays that way.
However, not everyone shares Palmer’s enthusiasm. Gary Marcus, a noted AI critic, expressed skepticism in response to a post on X (formerly Twitter) by OpenAI CEO Sam Altman, who claimed the project would be “great for our country.” Marcus challenges Altman’s optimism:
Like a lot of what Sam says, this is based on the conjecture, or in this case multiple conjectures:
- The entirely speculative conjecture that LLMs or something else OpenAI figures out how to be build will be enormously profitable. So far the [cost of] infrastructure field-wide ($250B, perhaps) has enormously outweighed total revenue, perhaps 50:1.
- The entirely speculative conjecture that any profits will actually do much to help the American people, as opposed to just enriching those who own that infrastructure. Yes, some people will be employed building data centers; but if the data centers work towards better AI, many others will lose their jobs. Net effect is entirely unclear.
Meanwhile, Doug Calidas, senior vice president of government affairs for Americans for Responsible Innovation, suggests that the initiative may not be as novel as it seems:
My sense is that it’s mostly a repackaging of commitments that have already been made (especially by SoftBank) coupled with an aspiration to raise even more money to get to this higher target. Given the extreme level of investment interest in this area and the players involved, I think it’s likely but not certain they’ll be able to pull it off, especially since Trump seems to be allowing them to tap funding from the Middle East. The spectacle surrounding the announcement and the public support for the project from President Trump will likely make it easier for them to hit their target.
Energy Experts’ Concerns
The energy sector is abuzz with discussions about the implications of the Stargate Project. The anticipated surge in electricity demand from AI operations is a major concern. Researchers have predicted a potential 15.8 percent increase in U.S. electricity demand over the next four years, driven by AI and data centers. This projection does not yet account for the additional demand from Stargate projects.
President Trump’s accompanying energy plans have raised eyebrows. On his first day in office, he declared a national energy emergency, halted off-shore wind development, and paused disbursement of funds from the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA), which largely support clean energy projects.
Line Roald, an electric power systems expert at the University of Wisconsin, Madison, describes these moves as contradictory:
It’s strange that at the same time that Trump is expressing his support for AI initiatives, he is also trying to restrict development of new wind generation. Wind is a cheap source of electricity that could help support the needs of new AI infrastructure. To support these electricity needs, we also need new power plants and transmission lines. This costs a lot of money to build, and is typically covered by all consumers in the region where the data center is built. As data centers are getting interconnected to the grid, they should pay their fair share for the expansion of the grid. Otherwise, electricity prices for everyone could rise.
Costa Samaras, director of the Wilton E. Scott Institute for Energy Innovation at Carnegie Mellon University, emphasizes the need for proactive management of AI’s electricity demands:
The easiest way to get things on the grid quickly is to bring your own power. BYOP. And an even better way is to not just bring your own, but to bring enough for the community. AI electricity load will only break the grid if we’re not proactive and don’t come together to manage it appropriately by deploying lots of new clean electricity, by maximizing energy efficiency, and by deploying virtual power plants. If we want to ensure our AI competitiveness and our national security, we don’t have the luxury of taking cheap, clean energy off the table.
Thomas Wilson, principal technical executive at the Electric Power Research Institute (EPRI), offers insights on powering data centers:
New energy generation takes time to deploy, but the shortest lead times right now are wind, solar, batteries, and natural gas. So if the data center community is interested in speed, that’s what they’ll be looking at, in addition to placing longer-term bets like advanced nuclear. New transmission takes time too. Data centers that operate flexibly, lowering or self-powering compute when the grid is stressed, require less grid buildout. And if tech companies can spread this compute over multiple connected facilities separated by tens of kilometers rather than concentrating them all in one area, this will give them access to multiple existing transmission lines. Both strategies could help them get connected faster.
Data Center Experts’ Perspectives
The Stargate Project has sparked excitement among data center providers. Kevin Cochrane, CMO of Vultr, sees this as a catalyst for industry growth and geographic diversity:
Stargate will act as a catalyst for data center providers of all types, across all geographies to recognize the importance of building out the capacity needed to support a wholesale transformation of the cloud stack and businesses around the globe. Every national government needs to have a strategy for the build-out of critical infrastructure to support AI. Data center capacity needs to be more broadly distributed across regions; specifically capacity-optimized for deploying next-generation GPUs with optimal energy efficiency and sustainability in mind. As with the building of data center capacity to support the internet revolution at the turn of the century and later the build-out of data center capacity to support new cloud services, similarly, we need to see another hyper-expansion of data center capacity worldwide.
Josh Mesout, chief innovation officer of Civo, shares a hopeful yet cautious outlook:
Any government backing for AI initiatives should be met with support. Much of the promised [initial] $100 billion will need to be put towards overcoming the GPU gap we’ve seen in our research, along with improvements to energy infrastructure to keep data centers running. Most importantly, the benefits of AI should be for everyone. Public and private organizations across all sectors stand to gain a huge amount from AI use, improving the lives of their customers and users. We’ve seen a major shift in the industry away from training models and towards more costly inferencing, so projects like Stargate ought to focus on keeping the cost of accessing GPUs as low and flexible as possible for businesses. Whilst large firms like OpenAI and Oracle certainly have the chops to deliver, it’s vital that all that funding isn’t just funneled into applications like ChatGPT.
IREN, a data center provider powered by 100 percent renewable energy, also weighs in. IREN’s chief commercial officer Kent Draper highlights energy as a potential bottleneck:
This announcement underscores the importance of next-generation data center capacity for supporting the growth of AI. It marks an inflection point whereby the highest levels of government and largest companies in the world are collaborating to address the data center supply shortage.
Access to power is the key bottleneck to new data center development. Timelines for securing new grid interconnections to build out data centers is longer than ever before. The challenge will be managing the already strained grids and ensuring power is available for the data center development.
It’s likely that a large amount of hyperscaler compute will be for proprietary use. Hopefully increasing public investment in AI infrastructure will help mitigate the risk of centralization of compute.
Originally Written by: Eliza Strickland,Emily Waltz,Dina Genkina
