Musk and Altman spar over ‘Stargate’ AI venture hyped by Trump

The Stargate announcement prompted immediate skepticism over whether it would come to fruition, or represented new spending by the companies

Author of the article:

Bloomberg News

Justin Sink

Published Jan 22, 2025  •  Last updated 4 minutes ago  •  4 minute read

Musk’s role in the administration running the newly-minted Department of Government Efficiency has prompted questions about conflicts of interest, self-dealing, and his ability to co-exist with Trump. Photo by Kevin Lamarque/Pool Photo via Associated Press files

Elon Musk openly questioned whether companies that joined United States President Donald Trump’s announcement promising hundreds of billions of dollars in artificial intelligence (AI) infrastructure could follow through on their promises, exposing an early internal rift within the White House.

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“They don’t actually have the money,” Musk wrote on his social media platform X hours after the announcement. “SoftBank has well under US$10B secured. I have that on good authority.”

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Trump was joined by SoftBank Group Corp.’s Masayoshi Son, OpenAI’s Sam Altman and Oracle Corp.’s Larry Ellison at the White House to announce the venture, dubbed Stargate, which they said would deploy US$100 billion immediately with the goal of eventually spending US$500 billion for the construction of data centres and physical campuses.

“This is to me a very big thing,” Trump said. “I think it’s going to be something that’s very special.”

Altman took to X to dispute Musk’s characterization on Wednesday, calling it “wrong” and suggesting Musk was upset because the pact could rival the billionaire’s own artificial intelligence efforts.

The public spat underscored some of the tensions that could dominate Trump’s second term in office and echo issues he faced during his last stint at the White House.

The president’s penchant for portraying himself as a dealmaker resulted in him repeatedly touting private-sector promises to spend on the U.S. that never actually materialized, or represented preexisting commitments that executives repackaged to curry favour with the president. Some of those promises, like aborted plans for a massive Foxconn manufacturing campus in Wisconsin that Trump dubbed the “Eighth Wonder of the World,” became fodder for Democrats on the campaign trail.

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The Stargate announcement prompted immediate skepticism over whether it would come to fruition, or represented new spending by the companies.

President Donald Trump, from left, speaks as Masayoshi Son, SoftBank Group CEO, Larry Ellison, chairman of Oracle Corporation and chief technology officer, and Sam Altman, OpenAI CEO listen in the Roosevelt Room at the White House, Tuesday, Jan. 21, 2025, in Washington. Photo by Julia Demaree Nikhinson/Associated Press files

Son had already announced plans for a US$100 billion U.S. investment in AI during an event with Trump in December at the president’s Mar-a-Lago estate, and Stargate is expected to draw from that pot. SoftBank was also met with immediate questions over where the company would get the capital to fund its initiative.

During Trump’s last term, Son was raising his US$100 billion Vision Fund with money from outside investors and poured the cash into startups such as WeWork, Uber Technologies Inc. and DoorDash Inc.

SoftBank doesn’t have the cash on hand to deliver on Son’s pledge this time. The company had 3.8 trillion yen (US$25 billion) in cash and equivalents on its balance sheet at the end of September. Still, the company’s finances have recovered with the initial public offering of chip design firm Arm Holdings Plc. SoftBank still owns about 90 per cent of Arm, which now has a market capitalization of about US$160 billion.

Bloomberg previously reported that SoftBank might tap hyperscalers in a project financing scheme and leverage tens of billions of dollars into hundreds of billions of dollars. But the effort could lead to calls for higher yields on future SoftBank bond issues.

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Son has vowed to increase his investments in artificial intelligence, which he has described as a technology that will change virtually every business. SoftBank invested US$500 million in OpenAI in October and is aiming to increase that investment by acquiring up to US$1.5 billion in the startup’s stock through a tender offer for existing shareholders.

Musk’s Influence

Separately, Musk’s role in the administration running the newly-minted Department of Government Efficiency, a cost-savings effort, has prompted questions about conflicts of interest, self-dealing, and his ability to co-exist with Trump.

Democrats and government watchdogs have already expressed concern that Musk could seek to roll back regulations on and investigations into Tesla Inc.’s autonomous driving system, and head off investigations into labor practices at his companies.

The language Musk used in his X post was also familiar to closer watchers of Tesla. The U.S. Securities and Exchange Commission accused Musk of committing fraud in 2018 when he tweeted that he had “funding secured” to take the carmaker private. The chief executive officer reached a settlement with the SEC that required him to pay a us$20 million penalty and relinquish his role as Tesla chairman.

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Musk’s firms hold billions of dollars in government contracts, and allies have suggested that the incoming administration could seek to expand government subsidies for contracts with SpaceX and its Starlink service. And Trump himself suggested as recently as Tuesday that he would be open to Musk purchasing TikTok, a social video app that rivals his own X platform.

The billionaire was an enthusiastic financial backer of Trump’s reelection effort, but his penchant for off-the-cuff commentary on his social media platform seemed destined to create headaches for the White House.

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White House Press Secretary Karoline Leavitt said Stargate would create “a minimum” of 100,000 new jobs when asked about Musk’s comments on Fox News.

“The American people should take President Trump’s and those CEOs’ word for it,” she said. “These investments are coming to our great country, and American jobs are coming along with them.”

—With assistance from Lynn Doan and Craig Trudell.

Bloomberg.com

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