OpenAI, known for its advanced AI models, has expanded its cloud partnerships beyond Microsoft’s (MSFT) Azure. While Microsoft Azure was the sole provider of computing capacity for OpenAI before, OpenAI can now use services from Oracle (ORCL) and other players to meet its growing computing needs. This move was revealed during President Donald Trump’s announcement of the $500 billion Stargate Project.
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However, Microsoft still has the first option to fulfill OpenAI’s new cloud computing needs. OpenAI can work with other providers only if Microsoft can’t meet certain requirements.
What Is the Stargate Project?
On January 21, 2025, President Donald Trump announced the ‘Stargate’ project, a major AI infrastructure investment. This initiative, a joint effort between OpenAI, Oracle, and SoftBank (SFTBY), aims to invest up to $500 billion in the next four years. The project will start with an immediate $100 billion investment to build data centers and energy facilities, beginning in Texas.
The goal is to strengthen the United States’ position in AI technology, create over 100,000 jobs, and boost the economy.
Impact on Google and Other Cloud Providers
The shift away from Microsoft’s exclusive cloud partnership with OpenAI opens up new opportunities for other cloud providers, including Google.
In December 2024, Alphabet’s Google requested the U.S. Federal Trade Commission (FTC) to intervene and break up Microsoft’s exclusive deal with OpenAI, citing concerns over competition. With OpenAI now partnering with multiple providers, players in the cloud space can now compete more directly for a share of the lucrative AI-driven market.
Which Cloud Player Has the Most Upside Potential?
Turning to Wall Street, out of the four stocks mentioned above, analysts think that MSFT stock has the most room to run. In fact, MSFT’s average price target of $509.73 per share implies more than 18% upside potential. On the other hand, analysts expect the least from SFTBY stock, as its average price target of $32.20 equates to a gain of just 4.78%.
