Source: Huaren Street News
Author: Li Xiaoyin
Trump officially announced a major AI project, planning to invest $500 billion. Oracle, NVIDIA, and Arm stocks have all risen across the board.
On the evening of Tuesday, Eastern Time on the 21st, Trump announced the "Stargate" project. After the news broke, US tech stocks rose collectively overnight, with Oracle, NVIDIA and other companies seeing significant gains.
As of the close of the day, Oracle rose 7%, NVIDIA rose 2%, Arm rose 4%, outperforming the major tech ETF (XLK) and the S&P 500 index.
Investment of over $100 billion, tech giants "go all out"
Wall Street News previously mentioned that the "Stargate" project plans to establish a joint venture called Stargate by OpenAI, SoftBank and Oracle, to jointly invest heavily in AI infrastructure, with an initial capital of $100 billion, which is expected to increase to $500 billion within 4 years.
According to media reports, in the run-up to his inauguration, Trump publicly stated that he would pave the way for "people with a lot of money" to invest in "AI factories" to provide power for data centers; Meta CEO Zuckerberg, Amazon founder Bezos and other tech executives attended Trump's presidential inauguration on Monday; and one of Trump's first actions after taking office was to revoke the AI executive order from the Biden era.
This means that, unlike Biden, Trump's attitude towards AI after taking office is very positive, not only allowing companies to "go all out", but also actively attracting investment.
OpenAI's Chief Financial Officer Sarah Friar said that the Trump administration has shown "real willingness" in technology and artificial intelligence, and is "in a very leading position economically".
Some analysts believe that the launch of the "Stargate" project may mark the beginning of the Trump administration's efforts to cooperate with tech companies. Demis Hassabis, CEO of Google DeepMind, said in an interview on Tuesday:
"It's clear that the new government will encourage technology and technological development."
"The government is getting advice from people who really understand the cutting edge."
What does this mean for the three companies?
There is also analysis that as the lead of this project, OpenAI can obtain a large amount of data center computing power resources through cooperation, Oracle is expected to become a key infrastructure provider and receive more orders, and SoftBank can gain the "ticket" to this major project with its "financial strength".
Oracle founder Larry Ellison mentioned in a speech at the White House that even before the "Stargate" project was officially announced, Oracle had been cooperating with OpenAI and SoftBank. Mizuho analyst Siti Panigrahi said in a report to clients:
"This is an important opportunity for Oracle, as it may become a key infrastructure provider for this large-scale investment."
SoftBank CEO Masayoshi Son said in a speech at the White House that he had promised to invest $100 billion in the US last month, and Trump had suggested he double the investment at the time. Now, this figure has increased to $500 billion.
OpenAI founder and CEO Altman also said:
"I'm glad we can do this in the US. I think this will be the most important project of this era."
Guangfa: "Stargate" becoming a "national project" in the US highlights the "extreme importance" of AI
Guangfa Securities believes that Stargate becoming a "national project" in the US reflects the extreme importance of AI development. The average annual capital expenditure of $125 billion (2025 will be $100 billion) over 4 years of $500 billion, as a comparison, the total capital expenditure (including non-AI) of Microsoft, Google, Meta and Amazon in 2024 is only about $220 billion.
Guangfa Securities believes that although this project is a major "achievement" in the tech field since Trump took office, the probability of execution and landing is relatively high. It is expected that Stargate will drive the continued expansion of the markets for optics, copper, data center interconnect (DCI), local power resources/energy storage systems/small reactors in Texas, liquid cooling systems, and server power supplies.
In terms of the post-merger corporate structure, Guangfa expects that SoftBank and OpenAI are the main partners of Stargate, with SoftBank responsible for finance and OpenAI responsible for operations; Arm, Meituan, NVIDIA, Oracle and OpenAI are the key initial technology partners.
