SoftBank Joins OpenAI, Oracle in AI Pact Unveiled by Trump

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"We're beginning with an enormous influx of investments into our country that no one has ever seen before whatsoever," Trump stated at the White House on Tuesday.

The president was joined by SoftBank's Masayoshi Son, OpenAI's Sam Altman, and Oracle's Larry Ellison. The joint venture will invest $100 billion "immediately" and aim to ultimately reach at least $500 billion to build new infrastructure for OpenAI, including data centers and physical campuses, according to Son, who will serve as chair of the venture.

The initial investment will come from SoftBank, OpenAI, Oracle, and Abu Dhabi investor MGX. The first step of building the system will take place in Texas, SoftBank said. SoftBank and OpenAI will lead the partnership, with SoftBank managing the finances and OpenAI overseeing the operations, they noted. Arm Holdings, Microsoft, and Nvidia will provide technology, along with Oracle and OpenAI, they mentioned.

The president has indicated that he plans to take a comprehensive approach to maintain American dominance in artificial intelligence, by encouraging private companies to invest more in AI through simplified legislation and fewer bureaucratic hurdles. This initiative will be led by tech industry experts who have joined his administration, such as incoming AI and cryptocurrency advisor David Sacks and Elon Musk, who has become one of the president's key advisors.

Shares of SoftBank surged an 11% in Tokyo on Wednesday, marking its largest single-day gain since August. Oracle jumped as much as 11% in New York trading, and Nvidia rose almost 5%. Shares of Arm, which is majority-owned by SoftBank, rocketed upward as much as 18%.

The president stated that he would utilize emergency declarations and executive powers to facilitate construction projects, particularly by providing easier access to energy. During the statement, Trump and the executives pointed out potential applications for AI in healthcare and other areas, which could propel US economic growth.

"AI has a vast potential to benefit everyone, for every single American," Ellison said.

The project has broad backing and will be able to secure the necessary funding without needing any public money, said Rene Haas, CEO of Arm.

He gave serious consideration before making the announcement at the White House," he stated. "There is significant public support for this action.

Haas stated that the government's role will be essential in expediting permits and clearing regulatory obstacles. He mentioned that the new administration has a strong commitment to moving at a swift pace in resolving these issues.

The actual scope of new commitments remained still uncertain.

Yesterday, the son of the president visited Mar-a-Lago to announce that SoftBank would be spending $100 billion over the next presidential term. According to a source, Tuesday's announcement was a key part of this effort. Ellison noted that some of the data centers being considered for the project were already under construction, and OpenAI has also already extensively outlined plans to invest in AI-related infrastructure.

Investing in Artificial Intelligence

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Signed by Joe Biden, a series of measures were imposed to boost US energy development to meet a sudden surge in power demand from data centers.

SoftBank may need to invest between $25 billion and $30 billion in this specific project, stated Kirk Boodry, an analyst with Astris Advisory. “We anticipate they will be able to secure investments from limited partners, potentially including funds from the Middle East, similar to their experience with Vision Fund,” he mentioned in a note to investors. “SoftBank will be able to cover this expense.”

Over time, this may result in the need for higher interest rates on future SoftBank bond offerings, which are an important source of financing, stated Takashi Fujiwara, the head of fixed income management and chief fund manager at Resona Asset Management Co.

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Following his second term, Trump becomes more aligned with key executives from Silicon Valley, as prominent figures like Musk, Mark Zuckerberg, Jeff Bezos, Tim Cook, and Sundar Pichai are seen attending his swearing-in ceremony at the US Capitol on Monday.

The Biden administration on the need for massive data centers that consume as much energy as entire cities.

News reported last month that it was attracted to SoftBank because the company has "access to a lot of capital" and is poised to invest that money, including "in areas such as power and data centers."

In a Fox News interview on Tuesday evening, Ellison mentioned that Stargate has been in development for quite a while. Construction of the first data centers in Texas is already underway, Ellison stated, and they'll be handed over to Altman – and likely OpenAI – to begin training their next model.

The scale of this investment is huge," Altman said. "And what I think that says about the likely progress of the technology, at least what all of us believe, is just as huge.

Cloud infrastructure providers like Microsoft, Amazon, and Oracle are rushing to expand their computing capacity by building new data centers. Oracle has already committed billions to build out new data centers — the company is expected to nearly double its capital expenditures this fiscal year to over $14 billion, largely because of these projects.

--With assistance from Jackie Davalos, Rachel Metz, Min Jeong Lee, Takahiko Hyuga, Caroline Hyde and Ian King too.

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