Project Stargate: Your "Cliff's Notes" on This $500 Billion OpenAI Play

I share our AI stocks, wealth dossiers and investing backgrounders ...

It’s called Project Stargate.

It’s a headline-grabbing a joint venture (JV) that’s focused on artificial-intelligence (AI) infrastructure and connects some of America’s top tech-and-AI minds (and companies)

It could be worth half a trillion dollars — and over time could rearrange America’s AI-infrastructure seating chart.

And it’s got the imprimatur of newly (re)installed U.S. President Donald Trump.

The Stargate deal was announced Tuesday during President Trump’s first full day in office.

It’ll take time for the venture — and the impact — to be fully understood (even among the participants themselves).

But it’s already triggered another tiff among America’s AI elite.

And it’s certain to trigger a slew of headlines in the days, weeks and months to come — many of them contradictory and almost all of them certain to ignite emotional “FOMO” investor reactions.

So we’ll use today’s issue of Stock Picker’s Corner (SPC) as a kind of “Cliff’s Notes” for Project Stargate.

I’ll give you a simple overview. Give you the key points so you’ll know what to watch. Share some of our “resources” on some of the pieces.

And even share some of the very real opportunities that already exist — with a promise to watch for new ones as they emerge.

So let’s get started.

---

The 4-1-1 on Stargate

I’m going to do here what I always do for my readers – and that’s intentionally oversimplify this.

Project Stargate is a $500 billion venture whose goal is to bolster America’s AI backbone over the next four years. According to published reports, the major players are:

• Privately held OpenAI, the progenitor of ChatGPT, which will serve as the operating partner, and will invest an initial $19 billion for a 40% stake.

• SoftBank Group Corp. (SFTBY), which will steer the financing, contribute $19 billion and control another 40%.

• Oracle Corp. (ORCL), an OG Silicon Valley firm that’s been a database leader for decades, and that’s also a player in cloud storage and enterprise software, will ante $7 billion.

• MGX, an Abu Dhabi-based “sovereign wealth fund” that was launched by the Artificial Intelligence and Advanced Technology Council (AIATC), will inject another $7 billion. (The AI-focused MGX is also backed by the Mubadala Investment Co. and tech holding company G42.)

• Nvidia Corp. (NVDA), the AI chipmaker that’s been surfing the AI wave, will serve as a technology partner.

• And Microsoft Corp. (MSFT), an early investor in OpenAI by virtue of a $14 billion equity infusion, will also serve as a technology partner, and figures to benefit as the ChatGPT inventor’s largest investor.

The initial $100 billion investment will fund data centers — including the first 10, already being built in Texas — and power generation, also crucial, as we’ll see in a minute. Proponents claim Project Stargate will ultimately create hundreds of thousands of jobs and help with the “re-industrialization” of America.

---

The Backstory

AI is many things. It’s an “enabling technology” — what experts refer to as the next “paradigm shift” in modern society. Or maybe “paradigm shock.”

As far as technologies go, AI isn’t incremental — it’s downright disruptive, meaning we’re in for a lot of changes. Whether those changes are good or bad will probably depend on where you’re sitting and how they impact your life.

At one time or another, you’re likely to experience both extremes.

And the stakes are high, because — in a global economy that’s rapidly deglobalizing — AI is the “new competitive advantage” that could cement, or change, the pecking orders of such economic leaders as the United States and China.

In short, a robust AI Economy isn’t a “nice to have” … or even a “need to have” … it’s a must have.

But there’s a stumbling block.

It’s something I’ve dubbed the “Infrastructure Deficit.”

You see, “infrastructure” — data centers, power plants, and data and electricity networks — is the elixir that makes AI go. There’s not enough AI-enhanced storage for all the projects that are in the works. We need more data centers. And we need more power plants to make those data centers run.

Think of it this way. Pulling off the AI Era here in America without all that “stuff” would be like trying to build the Transcontinental Railroad — without the tracks for the trains to run on … the trestles to cross the valleys … the tunnels to punch through the towering mountains … or the sprawling rail yards to service all the huffing-and-puffing “rolling stock.”

In short, it’s just not possible.

And we don’t have the infrastructure we need. The “Infrastructure Deficit” is real … and it’s serious.

Let me break down the pieces … give you some of those promised “Cliff’s Notes” … and offer some investment opportunities.

---

The Power Gap

The AI Revolution is spooling up demand like you wouldn’t believe. Right now, data centers devour about 4% of America’s electricity. But that will more than double to 9% by 2030, says the MIT Energy Initiative. To keep pace with AI growth, America must triple its data center power capacity by the decade’s end – more than 50 gigawatts (GW) of new capacity, says consultant McKinsey & Co.

🔵SPC’s Insights and Investments: For a great overview, check out the free report — “Visualizing the AI Power Boom” — that SPC co-founder Jack Delaney crafted this summer. It’s probably the best all-in-one-place primer on AI power that you’ll find.

We also got great feedback for the report “Going Nuclear: AI’s Power Partner,” published back in the fall. One of the stocks spotlighted in that report is Southern Co. (SO), which brought two reactors online in the last two years. With its extensive existing infrastructure, Southern is well-positioned to meet this power-demand growth — which will boost revenue. It’s also actively pursuing clean-energy projects, which fits with the AI sector’s desire for “sustainable” power.

---

The Capacity Shortfall

The United States had 5,381 data centers as of early 2024, says tech-intelligence firm AlphaSense. But we’ll need roughly 16,000 data centers by 2030, that firm’s researchers said. To close that chasm, public and private investments need to be in excess of $500 billion. And it won’t happen overnight: In Northern Virginia, for instance, the “lead time” for powering a new data center can exceed three years.

🔵SPC’s Insights and Investments: Earlier this month, we shared the report “3 REITs for the AI Era,” where one of our super-talented collaborators, Katherine Jovanovic, outlined a trio of exchange-traded funds with an AI-data-center focus (in the report’s second half). It’s definitely worth a look.

We’ve also written a bit about Vertiv Holdings Inc. (VRT), a Westerville, Ohio-based specialist in data-center technologies. The company is projected to grow earnings at an average annual rate of 26% over the next five years, meaning profits will double in less than three. Share prices tend to follow earnings over the long haul, which bodes well for the $148 stock.

Another beneficiary will be Nvidia, which we spotlighted last year after a pullback. It’s a company I know well, having recommended it at my previous newsletter, Private Briefing, on June 7, 2013. You can read our last major update by clicking here.

However, there’s one “AI Data Center stock” we really like — a financial powerhouse that has “making money” in its corporate DNA. The stock is in our Model Portfolio.

And we created a detailed dossier that’s available as part of our SPC Premium membership service.

---

The Gossip

Remember when I said this project will ignite some interesting storylines and trigger emotional responses?

We’re already seeing it …

OpenAI is run by the outspoken Sam Altman — an exec who’s openly disliked by Tesla Inc. (TSLA) CEO Elon Musk.

Backing Project Stargate was a big moment for President Trump, who’s promised to make AI a national imperative. But Musk, who’s a key “insider” in the new administration, couldn’t keep from pot-shotting the project, with an X post that questioned its finances.

Source: X

Then there’s the afore-mentioned Microsoft, which (thanks to its equity stake) holds the exclusive rights to provide cloud-storage services to OpenAI.

Which leads us to the final few stocks …

---

The “Deficit Closers”

If you hear the term “data centers” … and substitute “cloud storage” … and then recall what I said about the data-center deficit, you’ll start to get the picture. Finding extra storage is like trying to find a hotel room during spring break.

Microsoft is actually investing $80 billion in data centers during the current fiscal year, which ends in June. Experts say the lack of additional storage has Altman chafing at Microsoft. Under Project Stargate, Microsoft apparently swapped its “exclusive” agreement for a “right of first refusal” — which could still be good for its Azure cloud-storage business.

So one word you need to learn the meaning of is this one: “Hyperscaler.”

These are the firms that provide the massive cloud storage and raw computing power that AI needs. And there’s just not enough capacity — hence all the growth. In North America alone, the hyperscaler market is projected to grow from $38.39 billion in 2024 to $458.33 billion by 2034, a compound-annual growth rate (CAGR) of 28.12%, says Precedence Research.

The top three hyperscalers account for 66% of the global market.

Expect new opportunities for other hyperscalers — including smaller players like Dell Technologies Inc. (DELL) and Hewlett Packard Enterprise Co. (HPE), which has made an impact with its GreenLake suite.

One hyperscaler that I’m intrigued by right now is Alphabet Inc. (GOOGL).

And here’s why: Not only is it an AI play — by virtue of its search and advertising businesses, both enhanced by artificial intelligence …

But Alphabet is also a “Three-Trigger Stock,” thanks to:

• The AI enhancements to its search, advertising and cloud-storage businesses (in the latter, Google Cloud is No. 3 globally, with 11% of the market).

• It’s “special-situation” status, thanks to a U.S. Justice Department effort to break up the company over its alleged search monopoly. These breakup efforts rarely succeed — but even if they do, we like breakups and spinoffs.

• And as a kind of “call option” on quantum computing (a story I like a lot) — given its recent breakthrough with its Willow chip. (A recent Willow computation that took just five minutes would take the world’s very best supercomputer 10 septillion years to solve.)

Alphabet shares really interested me before the Willow announcement caused the stock to jump. But with a five-year earnings CAGR of 19%, you’re talking about profits that would double in less than four years.

But there’s another company worth checking out. In light of the Project Stargate announcement, I’m referring to it as the “New King of the Hyperscalers.” I see average-annual top-line growth of 19% and profit growth approaching 30% over the next five years. It’s in our Model Portfolio. And SPC Premium subscribers can read the special dossier by clicking the link I just gave you.

---

The Overview

There are other AI stocks, too. And, true to form, we just released this special “Quarterly Roundtable” report to our SPC Premium subscribers. I called it “The Secret to Picking AI Winners.” It’s simple to understand an is loaded with opportunities.

Think about about subscribing to check it out.

There you have it … the best “cheat sheet” for Project Stargate you’ll find.

See you next time;

---

Disclaimer: The information published in Stock Picker’s Corner, also abbreviated at times as “SPC,” isn’t personalized financial advice or a specific investment recommendation and should not be interpreted as such. The content produced is intended for informational purposes only. The writers and team members of Stock Picker’s Corner are not investment advisors or financial planners, and you should consult your own professional before making any investment decisions. There is inherent risk involved with investing and financial decisions, and any investment decisions you make are solely your own decisions. Market outlooks, estimates, or projections should not be construed as actual events that may occur. While stats and figures are believed to be as accurate as possible from public information available at the time of publishing, the writers and team members of this publication do not make any warranties regarding the information’s accuracy. Neither the writers, team members, or affiliates accept any liability for any direct or indirect losses from the information contained herein. Team members, contractors, and guest contributors may own assets and stocks mentioned in Stock Picker’s Corner. By using this site or associated social media accounts, you are indicating your consent to our terms of use, and this disclaimer. All content published by Stock Picker’s Corner is copyrighted. Any unauthorized reproduction of any content published from Stock Picker’s Corner is strictly prohibited.