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Trump-Backed “Stargate” Boldly Pledges Exclusive OpenAI Support
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Trump-Backed “Stargate” Boldly Pledges Exclusive OpenAI Support

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OpenAI’s Stargate is likely to exclusively support the AI startup.

Stargate, an artificial intelligence infrastructure project, was announced by Donald Trump this week, and will exclusively serve OpenAI, according to an exclusive Financial Times report. The project is backed by OpenAI and SoftBank (SFTBY), and aims to invest $100 billion in AI infrastructure, with plans to increase spending to $500 billion over the next four years. Oracle (ORCL) and Abu Dhabi’s MGX AI fund are also founding partners in this fund.

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Stargate Is Likely to Support OpenAI

The report stated that despite these ambitious plans, Stargate has not yet secured the necessary funding and will receive no financing from the government. It will only serve OpenAI once the project is completed. An insider told FT, “The intent is not to become a data centre provider for the world, it’s for OpenAI.” According to the report, the project is still in its early stages, with key elements like financing and structure yet to be determined.

Currently, both SoftBank and OpenAI plan to invest over $15 billion each into Stargate and aim to raise additional capital through a mix of equity from existing backers and debt. Furthermore, SoftBank will contribute existing funds into Stargate.

Why Is OpenAI Seeking Excess Funds?

OpenAI’s CEO, Sam Altman, has been working for over a year to secure better access to data and computing power, an important step in achieving the company’s goal of creating AI that surpasses human cognitive abilities. This drive has pushed OpenAI to seek infrastructure beyond its exclusive deal with Microsoft (MSFT), which has invested $13 billion in OpenAI but is not providing any capital for Stargate.

Furthermore, Stargate has been incorporated in Delaware and will have a separate operational unit led by OpenAI to manage the data centers and a capital-raising unit run by SoftBank. The project will also appoint a chief executive and independent board to oversee its development.

Which Stargate Stock Has the Most Upside Potential?

Turning to Wall Street, out of the three stocks mentioned above, analysts think that MSFT stock has the most room to run. In fact, MSFT’s average price target of $509.42 per share implies more than 14.7% upside potential. On the other hand, analysts expect the least from SFTBY stock, as its average price target of $32.20 equates to a downside potential of 5.4%.

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