Just one day after securing a whopping $100 billion investment from chip manufacturing giant Nvidia, OpenAI announced it has sealed deals with two more major tech players to establish five brand-new data centers across the United States.
The artificial intelligence startup revealed on Tuesday its plans to collaborate with Japanese conglomerate SoftBank and cloud powerhouse Oracle. Together, they will erect advanced computing facilities in several key locations: Lordstown, Ohio; Milam County, Texas; Shackelford, Texas; Doña Ana County, New Mexico; and an additional, currently undisclosed, location in the Midwest.
These ambitious new data center developments are a cornerstone of the “Stargate Project,” an initiative first revealed in January alongside President Trump at the White House. This colossal project aims for the three companies to collectively invest $500 billion into state-of-the-art facilities designed to power and deliver groundbreaking AI technologies to both everyday users and large enterprises.
Following Tuesday’s announcement, OpenAI confirms that agreements are now in place for over $400 billion worth of data center infrastructure. The company still needs to finalize further deals to achieve its ultimate $500 billion investment target.
Oracle will be shouldering the costs and managing the construction of three of these new data centers. Once complete, OpenAI will procure computing power services directly from Oracle. According to Oracle’s co-chief executive, Clay Magouyrk, the cloud giant plans to fund these massive builds partly by exploring innovative financial strategies with various partners, technology suppliers, and other investors.
He elaborated, stating that this involves “a combination of collaborating with the ideal partners and providers to leverage their combined capital, alongside exploring fascinating new corporate structures and innovative financing methods.”
For its two facilities in Ohio and Milam County, Texas, SoftBank plans to secure funding through a mix of bank loans and debt, as confirmed by an anonymous source close to the matter. OpenAI will be responsible for overseeing the construction of these sites.
This revelation is indicative of a broader industry trend, as tech behemoths globally race to construct AI-focused data centers. By year-end, companies like OpenAI, Amazon, Google, Meta, and Microsoft are projected to collectively invest over $325 billion in such infrastructure. OpenAI’s ambitious push was notably bolstered just days prior when Nvidia pledged a substantial $100 billion investment in the startup over the coming years.
The Nvidia agreement highlights OpenAI’s recurring strategy: securing significant funding from the very tech titans that also supply it with essential products and services. For instance, Microsoft, a key investor with over $13 billion poured into OpenAI between 2019 and 2023, subsequently earned billions as OpenAI purchased crucial computing power from them to develop and launch AI innovations such as the popular chatbot ChatGPT.
Nvidia’s initial investment amounts to $10 billion, valuing OpenAI at $500 billion and granting Nvidia approximately a 2% stake in the startup. Nvidia intends to follow this with nine more $10 billion investments as OpenAI continues its data center expansion alongside its partners.
However, concerns are mounting among experts. They fear that companies such as OpenAI could accumulate massive debts if AI technologies don’t achieve widespread adoption as rapidly as anticipated. Despite generating billions in revenue, OpenAI’s expenditures, primarily on computing power, currently run into the tens of billions.
Already underway as part of the Stargate Project, OpenAI and Oracle showcased a data center in Abilene, Texas, to reporters on Tuesday. Their joint plan is to construct eight such facilities, designed to collectively consume approximately 1.4 gigawatts of electricity – enough to energize hundreds of thousands of households. Two of these powerful data centers are already operational.
Furthermore, OpenAI intends to establish a computing facility in the United Arab Emirates. This decision follows a recent agreement between the Trump administration and the Persian Gulf nation. This particular data center is a collaborative effort involving Oracle, SoftBank, the Emirati AI company G42, and other partners.
(It’s worth noting that The New York Times initiated a lawsuit against OpenAI and Microsoft in 2023, alleging copyright infringement of its news content by their AI systems. Both companies have consistently rejected these claims.)