The Blubber

Trump Administration Unveils $500 Billion AI Initiative, but Questions Loom

One of the first major announcements from President Donald Trump’s new administration aligns with the artificial intelligence (AI) boom.

On his second day in office, Trump unveiled a $500 billion AI project backed by SoftBank (SFTBY), Oracle (ORCL), and OpenAI, claiming it would create over 100,000 American jobs almost immediately.

The initiative launched a company called Stargate, which announced on Tuesday that it would immediately deploy $100 billion, starting with data centers in Texas, and invest the remaining $400 billion over the next four years.

Trump hailed the project as "a resounding declaration of confidence in America's potential under a new president."

Tech Giants Rally Behind Stargate

Microsoft (MSFT), AI chip leader Nvidia (NVDA), and British semiconductor firm Arm (ARM) were named as key technology partners in the initiative. The stock market responded positively, with Oracle rising 7% and Nvidia gaining 4% the day after the announcement.

Musk vs. OpenAI: Funding Questions Emerge

However, the Stargate announcement quickly sparked controversy, including a social media feud between Elon Musk and OpenAI.

Shortly after the announcement, Musk criticized Stargate’s backers on his platform, X (formerly Twitter), writing:

"They don’t actually have the money. SoftBank has well under $10B secured."

OpenAI CEO Sam Altman fired back, responding:

"Wrong, as you surely know."

OpenAI has raised nearly $17 billion in the past two years and secured a $4 billion credit line, but expects to lose $5 billion in 2024 while generating only $3.7 billion in revenue. According to The Information, OpenAI would need to raise another $19 billion to fund Stargate fully.

Conflicting Reports on Funding

A person familiar with Stargate disputed Musk’s claims, telling Yahoo Finance that the project is ready to deploy the initial $100 billion, citing SoftBank’s $24 billion in cash as of its latest earnings report.

However, The Financial Times reported that Stargate has not yet secured its required funding and will receive no government financing. The report also noted that OpenAI would be Stargate’s sole customer once the project is completed.

AI Adoption Still in Early Stages

Despite the hype, AI adoption in the workplace remains low. Only 4% of Americans report using AI daily for work, though most people unknowingly use AI-powered products in their daily lives.