OpenAI's $500 Billion Stargate Data Centre Project Unravels Amid Delays and Disputes
OpenAI's highly publicized $500 billion Stargate data centre initiative, announced with great fanfare at the White House in January 2025, has quietly descended into a quagmire of stalled timelines, financing challenges, and internal disagreements among partners. What was envisioned as the largest AI infrastructure project in history is now emerging as a cautionary tale of ambition clashing with reality.
Stalled Progress and Partner Conflicts
More than a year after US President Donald Trump stood alongside OpenAI CEO Sam Altman, SoftBank's Masayoshi Son, and Oracle's Larry Ellison to unveil Stargate, the joint venture has failed to make significant headway. According to a detailed investigation by The Information, the project has not staffed up, has not broken ground on any facilities, and remains mired in a three-way dispute over control, financing, and site ownership.
The original vision was bold: $100 billion in immediate spending, 10 gigawatts of AI data centre capacity, and execution at breakneck speed. However, OpenAI missed its target of securing 10 GW by the end of 2025, achieving only about 7.5 GW. Its projected compute spending through 2030 has ballooned from $450 billion to $665 billion. Meanwhile, the Stargate joint venture itself, intended to coordinate the entire effort, has been largely inactive, with OpenAI circumventing it through bilateral deals.
OpenAI's Failed Solo Attempt and Bilateral Deals
Frustrated by the gridlocked partnership, OpenAI explored building and owning its own data centres independently. The company scouted sites across the US, hired a general contractor, and began preparations to develop large campuses. The goal was to reduce reliance on third-party cloud providers, which are costlier over time, and take direct control of its compute destiny.
However, lenders were not supportive. Banks hesitated to finance multibillion-dollar construction projects tied to a company burning billions in cash annually—approximately $8 billion in 2025 alone—with no clear path to sustained profitability. As a result, OpenAI shelved the self-build plan and lost its general contractor due to delays, forcing it back to negotiations.
Rather than working through the Stargate joint venture, OpenAI bypassed it entirely. It struck a bilateral deal with Oracle in mid-2025 for 4.5 GW of capacity across multiple US sites, later expanding into a $300 billion, five-year cloud computing contract. Additionally, OpenAI signed compute agreements with Amazon Web Services and Google Cloud to address near-term shortages and locked in a $22.4 billion arrangement with CoreWeave. In total, OpenAI has committed roughly $600 billion in infrastructure agreements, all negotiated outside the venture meant to serve as the central coordination point.
SoftBank and OpenAI Clash Over Ownership
The Texas campus, originally planned as OpenAI's first self-built data centre, became a major flashpoint. After Oracle negotiations paused construction and OpenAI lost its contractor, the company brought SoftBank in as a partner for the site. However, the two sides immediately clashed over ownership: OpenAI sought control of the facility, while SoftBank wanted to develop and own it.
Sources indicate that the impasse required multiple trips to Tokyo between September and October, with marathon negotiation sessions at SoftBank's headquarters reportedly fueled by 7-Eleven snacks. The compromise reached was that SoftBank would own and develop the Texas site, while OpenAI would control its design and hold a long-term lease. Even after this agreement, SoftBank had to pause a planned $50 billion acquisition of data centre operator Switch due to regulatory hurdles.
Elon Musk weighed in on the announcement day, posting on X: "They don't actually have the money." He later claimed SoftBank had secured well under $10 billion at that point. Altman fired back, inviting Musk to visit the first site already underway and adding a pointed jab: "I realize what is great for the country isn't always what's optimal for your companies."
Oracle's $300 Billion Gamble Rattles Wall Street
Oracle, positioning itself as the financial backbone of Stargate, is facing significant blowback. The company has accumulated over $100 billion in debt—$38 billion for data centres in Texas and Wisconsin, $20 billion for a New Mexico campus—and its stock has lost roughly half its value since peaking in September 2025, erasing approximately $463 billion in market capitalization.
S&P Global has placed Oracle's BBB credit rating on negative watch, and some of its bonds, including a 10-year note issued in September, have been trading like junk debt. Credit default swaps, essentially insurance against Oracle defaulting, spiked in November and have not declined. Investor Michael Burry has reportedly placed an options bet against the stock.
Investment bank TD Cowen estimates that the OpenAI contract alone will require around $156 billion in capital spending and roughly 3 million GPUs. To fund this, Oracle may cut 20,000 to 30,000 jobs, freeing up $8–10 billion in cash flow. The company is also reportedly considering a sale of Cerner, the healthcare software unit it acquired for $28.3 billion in 2022, and has started asking new customers to pay up to 40% of contract value upfront.
Oracle's attempts at damage control have backfired. A post on X in early February insisting that the stalled Nvidia-OpenAI deal had "zero impact" on its financial relationship with OpenAI sent shares sliding nearly 3%. Venture capitalist Alex Kolicich summarized the mood: "This is literally bank-run language."
OpenAI Revises Spending Projections and Secures New Funding
In a clear sign of a reality check, OpenAI has dramatically reduced its spending projections. After months of touting $1.4 trillion in infrastructure commitments, the company is now telling investors it is targeting around $600 billion in total compute spend through 2030, according to CNBC. This figure is less than half of the original projection.
OpenAI generated $13.1 billion in revenue last year, exceeding its $10 billion target, but still burned through $8 billion. It now projects $280 billion in revenue by 2030, with roughly equal contributions from consumer and enterprise businesses. The company is also finalizing a massive funding round expected to exceed $100 billion, valuing OpenAI at $730 billion pre-money.
Nvidia is in discussions to invest up to $30 billion, replacing the $100 billion multi-year commitment announced in September that CEO Jensen Huang later confirmed was non-binding and never finalized. SoftBank is in talks for another $30 billion, and Amazon could invest up to $50 billion as part of a broader partnership.
However, the circular financing structure continues to unsettle analysts. Nvidia invests in OpenAI, which buys Nvidia chips. Oracle builds data centres for OpenAI, then charges OpenAI to use them. Everyone's balance sheet depends on mutual follow-through. As one market commentator noted: "It all works until one party slows down—and suddenly everyone feels it."
