Stargate is off to a slow start, Oracle Corp. CEO Safra Catz acknowledged during the company’s earnings call Wednesday, adding to concerns the $500 billion artificial intelligence (AI) infrastructure plan has stalled.
In an otherwise sparkling quarterly performance driven by AI-related cloud services sales, Catz said Stargate, the much-ballyhooed joint venture between Oracle, SoftBank, and OpenAI to build AI data centers over four years, is “not yet formed.”
Her comments come on the heels of a report in Bloomberg that SoftBank hadn’t yet begun the formal fundraising process for the project, in part because of economic volatility stemming from the Trump administration’s tariffs. Analysts have warned that President Donald Trump’s tariffs could undermine Big Tech’s AI investments.
Since Trump threatened onerous tariffs in late January, Stargate has faced problems raising funds to help build AI infrastructure in the U.S. Lenders and asset managers are proceeding cautiously out of fear over escalating costs and data center overcapacity. TD Cowen analysts warned tariffs on AI hardware could drive up construction costs between 5% and 15%, complicating the efforts of SoftBank in its campaign to gain financial backing from JPMorgan, Apollo Global Management, and others.
Compounding matters, strict chip rules have proved to be a technological obstacle. Case in point: A multibillion-dollar plan to build a massive AI data center hub in the United Arab Emirates using U.S. technology remains far from finalized as American officials try to navigate security terms over the export of advanced chips, Reuters reported.
Stargate UAE, a venture led by Oracle, SoftBank, NVIDIA Corp., OpenAI, Cisco Systems Inc., and Abu Dhabi’s G42, plans to build a 1-gigawatt compute cluster. The first 200-megawatt phase is scheduled to open in 2026. The 10-square-mile site will eventually host up to 5 gigawatts worth of data centers.
Adding to the uncertainty, Chinese AI startup DeepSeek is undercutting established players with cheaper AI models, casting doubts over the long-term profitability of Stargate’s proposed data center network. Microsoft Corp. and Amazon Web Services are both scaling back data center projects amid signs of slower AI-driven demand growth.
