The Stargate Project: Everything You Need To Know
Have you already heard about the Stargate Project? In this post, I would like to talk about one of the biggest AI infrastructure projects in history. With a planned investment of $500 billion, this project could change the future of AI, data centers, and semiconductor manufacturing. The initiative is hoped to be the potential beginning of a Golden Age for US technological progress, with far-reaching effects on global innovation and regulatory frameworks. Announced on January 21, 2025, by Donald Trump. The projects should create more than 100,000 jobs.
Some top companies are involved, and the impact on technology and the stock market could be massive. Let’s dive into the details.
Vision
AI is growing fast, but there is one big problem: computing power. As AI models become more advanced, they require more powerful chips, bigger data centers, and faster cloud services. The Stargate Project is designed to fix these problems by building next-generation AI infrastructure across the United States.
This project is important for another reason: global AI competition. Countries like China are also investing heavily in AI, and the U.S. wants to stay ahead. By building better AI infrastructure, the U.S. can keep its lead in AI and create new economic opportunities.
Companies involved in the project will benefit from increased demand for AI computing. Let’s take a closer look at the key players and their roles in making this project happen.
Major Players and Their Roles
SoftBank
Japanese technology giant SoftBank is one of the biggest financial supporters of the Stargate Project. SoftBank has already invested billions in AI startups through its Vision Fund. Now, it is helping to fund the construction of AI-focused data centers and cloud computing infrastructure. The company believes AI will be the biggest driver of future economic growth, and it wants to be at the center of it.
OpenAI
OpenAI, the company behind ChatGPT, is leading the AI research side of the project. OpenAI needs massive computing power to train its AI models, and the Stargate Project will provide the resources it needs. With better infrastructure, OpenAI can develop more advanced AI systems, which will help it stay ahead of competitors like Anthropic, Google DeepMind, and Meta AI.
Oracle
Oracle is responsible for building hyperscale AI data centers. AI models require huge amounts of cloud storage and computing power, and Oracle will provide the cloud-based solutions for these operations. Oracle has already partnered with OpenAI and Microsoft in the AI space, and its involvement in Stargate will strengthen its position in the AI cloud market.
ORCL:
CAGR 5Y: +26% (SPY: +14.86%)
CAGR: 10Y: +14.6% (SPY: +12%)
CAGR 15Y: +14.16% (SPY: +13.32)
MGX
The United Arab Emirates-backed MGX fund is another major investor in the project. The UAE has been investing heavily in AI, and MGX sees this project as a chance to be part of a historic transformation in computing infrastructure.
Arm and NVIDIA
AI needs powerful chips, and two of the biggest names in semiconductor technology are involved in the project.
Arm is helping design energy-efficient AI chips that can handle large AI workloads.
NVIDIA, the world’s leading supplier of AI GPUs, provides high-performance graphics processors that power AI applications. NVIDIA’s role in the project will further cement its dominance in the AI chip market.
NVDA:
CAGR 5Y: +75.76% (SPY: +14.86%)
CAGR: 10Y: +70.85% (SPY: +12%)
CAGR 15Y: +46.42% (SPY: +13.32)
Microsoft
Microsoft has been a key AI player, thanks to its multi-billion-dollar investment in OpenAI. Now, it is integrating its Azure AI cloud services into the Stargate Project. Microsoft’s cloud business will likely see huge benefits as more AI firms rely on its infrastructure.
MSFT:
CAGR 5Y: +19.45% (SPY: +14.86%)
CAGR: 10Y: +25.80% (SPY: +12%)
CAGR 15Y: +20.97% (SPY: +13.32)
Potential Risks
Building AI infrastructure at this scale is extremely expensive. The $500 billion investment is huge, but costs could rise even higher due to inflation, supply chain problems, and rising energy prices.
Another major risk is government regulation. AI is becoming more powerful, and governments around the world are discussing new rules to control its development. If strict laws are introduced, they could slow down the project or make it more expensive.
There is also a competition risk. While the U.S. is leading AI development now, other countries, especially China, are investing billions into AI research and semiconductor manufacturing. If China develops better AI chips or cloud infrastructure, the U.S. could lose its competitive edge.
Energy consumption is another big issue. AI models require huge amounts of electricity to run. Building data centers for the Stargate Project will increase demand for power, which could lead to higher energy costs and environmental concerns. Some companies are already working on solutions, like using renewable energy sources or more efficient AI chips, but this remains a big challenge.
Market Impact
For investors, the Stargate Project presents some opportunities. The companies involved in the project are already seeing increased demand for their products and services.
NVIDIA (NVDA): As the leading supplier of AI chips, NVIDIA could see its revenue continue to grow. The company’s GPUs are already in high demand, and this project will only increase that need.
NVDA:
EPS Estimate 5Y Growth: 30%+
PEG: 0.78 (5Y mean: 3.21)
Forward Price/Earnings: 25.7 (5Y mean: 42.7)
Forward Price/Sales: 13.9 (5Y mean: 17.9)
My analysis:
Microsoft (MSFT): Microsoft’s Azure cloud division could see major gains as more companies move their AI operations to its platform.
MSFT:
EPS Estimate 5Y Growth: 12%
PEG: 2.27 (5Y mean: 2.49)
Forward Price/Earnings: 27.4 (5Y mean: 30.9)
Forward Price/Sales: 9.6 (5Y mean: 10.4)
Oracle (ORCL): Oracle’s role in building AI-focused data centers means it will likely get multi-billion-dollar contracts. As AI demand grows, Oracle’s cloud revenue could double within the next seven-ten years.
ORCL:
EPS Estimate 5Y Growth: 10%+
PEG: 2.11 (5Y mean: 2.77)
Forward Price/Earnings: 23.0 (5Y mean: 17.9)
Forward Price/Sales: 6.6 (5Y mean: 5.3)
Arm Holdings (ARM): Arm’s energy-efficient chip designs will be key to making AI computing more affordable and scalable. This could lead to higher licensing revenues and partnerships with major semiconductor manufacturers.
ARM:
EPS Estimate 5Y Growth: 30%+
PEG: 1.86 (5Y mean: 14.53)
Forward Price/Earnings: 57.3 (5Y mean: 78.9)
Forward Price/Sales: 24.7 (5Y mean: 30.7)
Key Arm Revenue Streams:
Licensing Fees: Arm develops chip architectures and licenses them to companies like Apple, Qualcomm, Samsung, NVIDIA, and Amazon. These companies pay one-time licensing fees to use Arm’s designs in their own processors.
Royalties: After licensing, Arm earns royalties on every chip sold using its technology. These royalties are typically 1-2% of the chip’s price, but since Arm-based chips are used in billions of devices, this generates a steady revenue stream.
Software and Services: Arm also offers software tools, security solutions, and consulting services, helping companies optimize their chips for different applications.
SoftBank (SFTBY): SoftBank’s Vision Fund has invested heavily in AI startups. If the Stargate Project succeeds, many of these startups will grow rapidly, increasing the value of SoftBank’s portfolio.
Future of AI Infrastructure
Over the next years, AI is expected to contribute over $15 trillion to the global economy. That means any company involved in AI infrastructure today could see huge growth in the coming years.
I believe we are still in the early stages of AI adoption. As technology improves, more industries—healthcare, finance, manufacturing, and even entertainment—will rely on AI for decision-making and automation. This means demand for AI chips, cloud computing, and data centers will only increase.
For investors, the key is to focus on companies that are essential to AI infrastructure. NVIDIA, Microsoft, Oracle, and Arm are some of the biggest potential winners in this space. Watching how these companies perform in the next few years could provide valuable investment opportunities.
This is not a financial or investing recommendation. It is solely for educational purposes.
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Thanks. NVDA seems ok.