The ambitious $500B Stargate AI project from OpenAI and SoftBank has stalled due to internal disputes, forcing OpenAI to seek massive independent compute deals.
The $500 billion Stargate AI project by SoftBank and OpenAI has stalled just six months after its high-profile launch. A new report from The Wall Street Journal reveals the venture has not completed a single data center deal, a significant setback for one of the most ambitious initiatives in the AI infrastructure race.
Internal disagreements between the partners over key terms, including site locations, are reportedly to blame for the delays. While the joint venture struggles, OpenAI has moved ahead on its own to secure the vast computing power it needs, recently signing a massive deal with Oracle.
The original project has now sharply scaled back its plans, aiming for just one small facility in Ohio. This quiet reality stands in stark contrast to its grand unveiling, casting doubt on its ambitious future and shaking up the competitive landscape for AI compute.
From White House Vows to a Stalled Reality
The venture’s launch in January 2025 was a major media event. Unveiled at the White House, SoftBank and OpenAI pledged to supercharge U.S. AI ambitions with a $500 billion investment, with $100 billion promised “immediately” to build a fleet of advanced data centers.
At the time, SoftBank Chairman Masayoshi Son proclaimed, “This is the beginning of our golden age,” capturing the immense optimism surrounding the project. The goal was to create the physical backbone for the next generation of artificial intelligence, a task requiring unprecedented scale and capital.
Six months later, that vision has collided with operational friction. According to reports from The Wall Street Journal, the newly formed Stargate company has yet to finalize a single site deal. The primary cause is said to be fundamental disagreements between the partners on crucial terms.
The project’s paralysis is so pronounced that Oracle CEO Safra Catz recently told investors, “Stargate is not formed yet,” a blunt assessment of the venture’s status. This revelation underscores the deep challenges facing the high-profile partnership.
Despite the internal issues, the partners maintain a united front publicly. In a joint statement, OpenAI and SoftBank insisted they were “…moving at hyperscale and speed to deliver the AI infrastructure that will power the future and serve humanity,” a claim that now appears at odds with the project’s slow progress on the ground.
OpenAI Forges Ahead With Massive Independent Deals
While the official Stargate venture languishes, OpenAI is not waiting. CEO Sam Altman, driven by an urgent need for massive compute capacity, has aggressively pursued a multi-cloud strategy, signing enormous deals independent of the SoftBank partnership.
The most significant of these is a landmark agreement with Oracle. In a deal reportedly worth over $30 billion annually, OpenAI will rent 4.5 gigawatts of U.S. data center capacity, a colossal amount of power essential for training future AI models.
This move is part of a broader pattern. OpenAI has also inked an 11.9 billion compute deal with specialist provider CoreWeave and has been actively diversifying away from its historical reliance on Microsoft’s Azure cloud since early 2025.
This strategic pivot is a direct response to the escalating demands of AI development. With compute costs soaring, securing a diverse and robust pipeline of infrastructure is not just a preference but a critical necessity for survival and growth in the AI arms race.
A Brand in Disarray and a Boon for Rivals
The Stargate brand itself has become a source of confusion. OpenAI has reportedly used the name for data centers in Texas that are not part of the SoftBank deal. Furthermore, a separate “UAE Stargate” project was announced with different partners, including Nvidia and Cisco.
This fragmentation suggests a disjointed strategy and further highlights the troubles within the core U.S. venture. For SoftBank, which became OpenAI’s largest investor through a deal valuing the company at $300 billion, the stall is a significant hurdle for its AI ambitions.
The project’s stumbles are a major opportunity for established cloud providers. Analysts note that Stargate’s failure to launch is a boon for incumbents like Oracle, Amazon, and Google, who are now capturing the massive contracts OpenAI needs.
Some market commentary frames the situation as a necessary ‘reality check’ for the AI infrastructure hype cycle. The grand vision of a single, dominant AI infrastructure provider has been derailed, at least for now, by partnership friction and operational realities.
