SoftBank & OpenAI’s $500B AI Megaproject Hits a Wall – What’s Next?

Tech giants stumble as their moonshot data center plan grinds to a halt.

When $500 billion ambitions meet reality's speed bumps

The 'future of AI infrastructure' just got messy—regulatory hurdles, power demands, and classic overpromising plague the project. Meanwhile, investors keep throwing money at anything with 'AI' in the pitch deck.

SoftBank’s $500 billion partnership deal with OpenAI scales down sharply 

SoftBank and OpenAI are reportedly concerned with the scale of the data centre to be built on the site by SB Energy, a power and infrastructure company with SoftBank’s backing. SB Energy is currently the main energy supplier, operating both renewable and non-renewable sources for the data centers. The two companies have, however, revealed that they are moving with urgency on site assessments and advancing the project into multiple states. 

The collaboration has decided to scale back its plans to a more realistic goal of a smaller data centre in Ohio amid constant disagreements between Masayoshi Son and Sam Altman. SoftBank has secured an alternative investment method different from the original plan by borrowing $3 billion from Mizuho Bank. 

OpenAI has signed a $30 billion annual data centre infrastructure deal with Oracle to rent 4.5GW of data centre capacity. An additional, smaller contract with CoreWeave has pushed OpenAI data centre capacity close to 5GW, closer to this year’s Stargate target. OpenAI acted independently on the agreement with Oracle despite SoftBank’s interest in the deal. The parent company for ChatGPT is also working with Oracle, Crusoe, Nvidia, Cisco Systems, and G42 in the UAE to advance the Stargate project.

Oracle had committed $7 billion in the Stargate joint venture with an additional $25 billion in capital expenditures in 2026. Oracle Chairman Larry Ellison revealed that the first data centre of the Stargate project had begun construction in Texas. The company partnered with Crusoe to advance a 1.2 GW Stargate data centre in Abilene, Texas. 

Oracle pushes for more AI data centers in the AI race against China

Larry Ellison, Oracle co-founder and CTO, said they will build and operate more cloud infrastructure data centers than all their cloud competitors. Oracle will buy approximately 400,000 Nvidia GB200 chips to power the Abilene, Texas data centre. Oracle’s cloud deal, worth $30 billion, involving one of the Stargate partners, OpenAI, will begin in fiscal year 2028.

The Stargate joint venture aims to establish AI data centers across the U.S. and globally to reshape the computational infrastructure for advanced AI models. The venture has already raised $50 billion from its founding partners, including Oracle and Abu Dhabi sovereign fund MGX. SoftBank’s CEO, Masayoshi Son, is the chairman of the venture. The potential states for the data centers included: Texas, Michigan, Wisconsin, Wyoming, New Mexico, Georgia, Ohio, and Pennsylvania. 

The TRUMP administration has been in the AI race against China, evident from recent feuds over tariffs and China’s block on critical minerals for building AI chips. Trump declared a national energy emergency on his first day in office. The emergency fund aimed to remove all regulatory obstacles to oil and gas drilling, coal, and critical mineral mining. It also aimed to build new gas and nuclear power plants to increase the country’s energy capacity. 

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