OpenAI's Stargate project struggling to get off the ground, due to tariffs
162 comments
·May 13, 2025jsheard
captainclam
To be clear, I'm pretty sure the half-trillion figure is the projected combined investment between SoftBank, OpenAI, Oracle, and MGX. Not public, US tax-payer dollars.
If that's not what you meant my apologies. Reason I'm quick to point this out is I think some of the writing/headlines around are suggestive of this misconception.
spiderfarmer
Deepseek was one nail in the coffin. The tariffs the second. More will follow.
tccuuchffhfu
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badFEengineer
Stargate is $500 billion, not $500 million - surprised the article is off by a factor of 1000x
0cf8612b2e1e
It’s such a ridiculous number that the author probably thought the source had the typo.
jasonjmcghee
The cynical part of me thinks it could be engagement bait. It's absolutely the type of typo someone would make in a tweet to help it go viral.
neilv
Besides the tariffs added to buildout cost...
> Investors are also growing wary of an overcapacity spike. As Bloomberg notes, tech giants including Microsoft and Amazon have adjusted their data center strategies, in some cases pulling back on construction projects.
Is "overcapacity" concern here bundling up all the other effects of disruptions by the current administration?
And are there significant concerns about Stargate and OpenAI specifically, separate from those traceable to the administration or economy?
rsynnott
Even before Trump's trade war, there was some pullback there. I'd assume that some of the hyperscalers are just getting nervous that the bubble may have peaked.
nerevarthelame
It's notable that while the initial announcement promised an "immediate" investment of $100 billion, nearly 4 months later SoftBank "has yet to develop a financing template or begin detailed discussions with potential backers."
I'm sure tariffs are partly to blame, but it seems criminally misleading to be nowhere near ready to provide that $100 billion.
rurp
I for one am shocked shocked that a big investment deal announced by this administration turned out to be vastly overhyped.
toomuchtodo
Related:
SoftBank Stargate Venture With OpenAI Snags on Tariff Fears - https://www.bloomberg.com/news/articles/2025-05-12/softbank-... | https://archive.today/Vi5Gr - May 12th, 2025
ashvardanian
> Per an analysis by TD Cowen cited by Bloomberg, hiked prices for server racks, cooling systems, chips, and other components could contribute to overall build cost rises of 5-15% on average.
I can agree that infrastructure generally has much lower margins than software businesses, but I don't know of any mega-projects that wouldn't turn out costlier during construction, and 15% is hardly something that stopped them.
klaff
Stargate wants to raise $500B not the paltry $500M as mentioned in the article.
mmastrac
We, as in the rest of the world, need to get off our butts and take advantage of this self-own, forced-error of a presidency. It's the perfect time to build industry outside of the USA which has shown itself to be a bad partner, unreliable and willing to turn on all of us in the span of a few weeks in order to right perceived wrongs that may or may not exist (more likely the latter than former).
qoez
In the EU it just feels like big beaurocracy gets to make all the big decisions about doing things like this and small and medium orgs can't spring up to go against stumbling entities like this because we're taxed out of the wealth needed to do so.
spiderfarmer
I don’t agree with this sentiment. Over the past few years I’ve seen a lot of companies switch to EU based alternatives already because of the data regulations. This is a second wave. And now nobody trusts the US anymore the rest will follow.
crop_rotation
What switches have you seen. Very curious to know what EU based alternatives are gaining steam.
bilbo0s
Not really.
There's plenty of wealth in the EU.
What they don't have is an appetite for risk. You could lower taxes to zero, but you'd still not get the level of speculative investment in the US without cultivating a much larger appetite for risk. Similar issue exists in places like Japan. Investor classes that are, at the median, more conservative than they are in the US. So in the US we "lose" bigger, but we also "win" bigger.
(Of course all of this was pre-Trump. Now, I'm not sure there is enough certainty out there for even the big risk takers. But, historically, we in the US have been more risk-phillic.)
qoez
I wonder if paradoxically less certainty could lead to more risk taking. If the secure sources of wealth starts becoming shaky looking at other risky options starts feeling less scary (or equally scary/uncertain as the previously stable one). If there's already an easy path to winning on the other hand pre-trump, why take the risky one.
saubeidl
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Herring
You have plenty of time. Even if Trump leaves office right now, his damage will last for decades (eg look at the supreme court). And speaking as someone on the ground, ordinary Americans are very far from learning the right lessons. They'll just elect someone like him again after 1 democrat tries to clean up the mess.
xnx
Is Stargate a real thing? I thought it was just a PR stunt.
aresant
This is a techcrunch link arbitrage to the actual article if we can update
https://www.bloomberg.com/news/articles/2025-05-12/softbank-...
saubeidl
I can't help but think this fixation on ever-bigger data centers with ever-more compute is a very American approach.
It's the same line of thought that gave us jumbo refrigerators, muscle cars and supersize meals.
In the American mind, bigger = better.
That that's not necessarily the best way to better results has been demonstrated by the Deepseek shock.
I do wonder if more foundational research would be a better investment.
Closi
It’s not an either/or - it can be both!
If you have the best foundational research, but then find yourself blocked by compute, that’s a bad place to be in.
At the moment compute is a constraint too (at least for the smaller shops, maybe not OpenAI!)
We don’t necessarily know that the next AI breakthrough will need less compute either! A breakthrough that gives 5x performance for 20x training compute and 2x inference cost would still be a giant breakthrough and need a lot of hardware! Although this sort of breakthrough is unlikely, and it’s likely to be smaller steps forward - but I think it might be the case that models continue to get more computationally expensive even if there are breakthroughs that make models more efficient because we will want higher capability.
saubeidl
I think it's often been shown that constraints are what brings out true breakthroughs, so I'm skeptical of scaling up throw brute force - to me it seems like a lazy way out that will prevent you from challenging your base assumptions and figuring out better ways of doing things.
klipt
> more foundational research
So you're saying a bigger amount of research is better?
courseofaction
But those damnable universities are just left wing brainwashing facilities, very little room for profit there. Cut their funding, educated people don't vote right /s
bigyabai
Who can act surprised? "Sparks of AGI" is what, 2 years old now? Meanwhile Masayoshi Son is promising AI "10,000 times smarter” than humans in a decade. It's a ruse by hardware manufacturers to bolster sales of niche IP. It's dumbfounding that corporate America, much less American politics, fell for the scheme.
Projects like this serve to create unattainable goals that practically hand peer powers a victory. Not because these peers are more powerful, but because they can define what they want and work towards a real goal and not handwavy vaporware nonsense.
horhay
They're gonna say this at a time where people are starting to question how farther we can scale hardware with the scientific knowledge that we've had? It doesn't even take researchers to know that GPU capabilities aren't scaling as much as it used to. And then what's clearer lately is that it seems hardware scaling isn't helping AI companies as much as it used to anymore.
Things that have so many question marks like that should be treated with a lot more pragmatism. But that's certainly not a language the Silicon Valley folks speak. Everybody's promising the next iPhone moment anytime they bring something out.
I'm sure the tariffs don't help, but might the fact that they're asking for Half A Trillion United States Dollars also have something to do with it? They already had one of the biggest funding rounds in history and that was an order of magnitude smaller than this, now we're talking about capital on the scale of upper-end national GDPs for a company which still isn't profitable and has no real moat to speak of. They may as well cut to the chase and ask for all of the money in the world.