Hello Reader,

It is hard to miss the Stargate Project this week, a jaw-dropping plan to invest up to half a trillion dollars (US$500 billion) in developing and expanding a massive network of AI infrastructure across the United States.

There is a lot to unpack from the announcement, though the criticisms sure came fast and furious - starting from Elon Musk, who publicly derided the new venture. Of course, given his bad blood with Sam Altman and how his own xAI venture is a competitor, what did you expect? A retweet with a thumbs up emoji?

Elon Musk

@elonmusk

@OpenAI They don’t actually have the money

OpenAI

@OpenAI

Announcing The Stargate Project The Stargate Project is a new company which intends to invest $500 billion over the next four years building new AI infrastructure for OpenAI in the United States. We will begin deploying $100 billion immediately. This infrastructure will secure… https://x.com/i/web/status/1881830103858172059

12:35 PM • Jan 22, 2025

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I thought it'd be an interesting exercise to pen down the few things that we know for sure.

The question of money

So is Elon right? The short answer: Yes, Softbank's Masayoshi Son doesn't even have a significant portion of the first $100 billion at the moment. Yet. But as a friend who writes about such things tells me, this could be the opportunity of a lifetime for Masayoshi to leave his mark by raising an unprecedented amount of money.

Mark Zuckerberg, who no doubt wishes money could snipe away that unfortunate footage of him ogling at Lauren Sanchez's cleavage at Trump’s swearing-in ceremony, quickly announced that Meta will spend up to US$65 billion on AI this year. And psst, he actually has the money.

The battle for AI dominance has just begun.

Harder road ahead for sustainability

If you care about our planet, you would probably be concerned about the rush to build so many new data centres. While I agree with this sentiment, it is likely that your assessment is focused on the wrong thing.

I think the issue isn't so much about the building of massive AI data centre campuses and how most, if not all, will be powered by highly polluting fossil fuels. You see, money is fungible, and the problem has to do with how much money will now be funnelled into AI and associated infrastructure such as upgrading power transmission lines, new power plants, and scores of new data centres.

This means a lot less money will be left for the uncertain yield and prolonged payback periods that are the hallmarks of most green projects. I don't expect efforts on the sustainability front to stop, but it'll certainly get much harder to finance them.

Microsoft says 'pass'

And oh, did you notice how the main partners of Stargate are OpenAI, Oracle, and Softbank? What happened to Microsoft, OpenAI's best buddy since it funneled billions of dollars their way?

Turns out Microsoft doesn't have the appetite to build that many data centres on a moonshot attempt. Who knows, maybe not enough fell for its trick to make customers pay for AI features they never asked for.

Sure, Microsoft will complete building new data centre capacity that has been agreed upon, as well as continue to "support" all OpenAI products and training efforts. But it won't be taking a front seat on the Stargate rocket ship.

You can read Microsoft's ~~goodbye message~~ update here.

Happy Lunar New Year to you!

PS: If you enjoyed my newsletters so far, do consider signing up for my Clearly Tech Substack here. I'll start posting there soon, promise!

Regards,
Paul Mah.

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