Author: Teresa Poletti
Investors must remember that any large-scale investment project involving political interests is likely to undergo major changes in the future.
On Tuesday (January 21), US President Trump announced the "Stargate" project, which was jointly funded by OpenAI, Oracle and SoftBank Group. The project promised to invest at least $500 billion in the field of artificial intelligence in the United States.
Shortly after the "Stargate" project was announced, Tesla CEO Musk posted on social media X to question whether SoftBank, the main investor in the project, could come up with the funds it promised.
Musk wrote, "They don't actually have that much money, I have reliable sources."

OpenAI, Oracle and the UAE AI investment company MGX are several other early investors in "Stargate". Dion Hinchcliffe, vice president of Futurum Research who studies corporate CIO behavior, believes that there are other investors who want to join, but only the companies with the strongest financial resources, such as Blackstone Group, are expected to be able to join.
Politicians like to boast about huge numbers when promising to increase investment and create more jobs, but the relevant projects do not always work out as they claim, which is another major reason why investors should be cautious about the huge investment numbers of "Stargate".
Trump should be familiar with this. During his first term, Foxconn pledged to invest $10 billion to build a factory in Wisconsin as part of Trump's plan to revitalize American manufacturing, but Foxconn ultimately scaled back its investment significantly, choosing to invest only $672 million and reducing the number of new jobs to 1,454, according to a 2021 Reuters report, a far cry from the 13,000 originally promised in 2017. Foxconn currently employs more than 1,000 people to build data servers, according to Wisconsin Public Radio.
The American Chip Act, introduced during former U.S. President Biden's term, also approved an investment of $280 billion to build new semiconductor factories in the United States, but some of the high-profile new factories associated with the plan have encountered construction delays, labor shortages and regulatory issues.
Stargate claims that its infrastructure will create "hundreds of thousands of jobs," but Oracle co-founder and CTO Larry Ellison often boasts to Wall Street analysts on earnings calls about Oracle's automated databases, automated features of cloud computing services, and low labor costs, so if the goal of the Stargate project is to build data centers, most of the jobs it promises will disappear after the factories are built. In addition, if improvements in artificial intelligence do bring a large number of jobs, these companies ignore the problem that jobs in other industries will disappear.
OpenAI, which developed ChatGPT, may be the biggest beneficiary. The company can use the data centers built by Oracle to train more data and achieve Sam Altman's long-term goal of AGI (artificial general intelligence), when artificial intelligence will reach or exceed human intelligence.
Meanwhile, Musk owns a company called xAI that’s involved in artificial intelligence, which may be why he attacked Stargate despite his close relationship with Trump and went to war with Ultraman, with whom he has been at odds over the direction of OpenAI.
Altman responded to Musk’s post by calling his claims “false” and inviting Musk to visit the first data center under construction, while also calling Musk “the most inspiring entrepreneur of our time.”

What investors should question is what Stargate’s backers mean when they claim the project will benefit the U.S. through the “re-industrialization of America.” Building 10 large data centers in Texas to train big language models and then run them seems to benefit OpenAI and its hardware and software suppliers more than the rest of American industry.
Shares of companies providing hardware and software rose on Wednesday (January 22) after the Stargate project was announced, especially Nvidia, Oracle, ARM and major investor SoftBank. But investors should not forget that any large investment project involving political interests is subject to huge changes in the future.
So while Musk has made many questionable statements in the past - such as his promises about self-driving taxis and autonomous driving features - this time, he is right to question his competitors.