Photo by Mohamed Nohassi on Unsplash

Oracle (Nasdaq: ORCL) stock was rising this week on the news that it had formed a joint venture with Japanese investment management firm SoftBank, and AI leader OpenAI.

Through this venture, called Stargate, the firms will invest $500 billion over the next 10 years to build AI data centers and other AI infrastructure.

While Oracle, SoftBank, and OpenAI are the main investors, Microsoft (Nasdaq: MSFT), NVIDIA (Nasdaq: NVDA), and Arm Holdings (Nasdaq: ARM) are the technology partners, along with Oracle and Open AI.

Oracle stock rose about 7% on Wednesday, while Arm jumped 16%. NVIDIA and Microsoft both rose about 4%, while other AI stocks in the AI ecosystem, like Palantir, were also rising.

What is Stargate?

The Stargate joint venture was announced Wednesday afternoon by President Donald Trump. Trump called it the “largest AI infrastructure project by far in history, and it’s all taking place right here in America.”

Trump said the Stargate joint venture will build the physical and virtual infrastructure to power the next generation of advancements in AI and will include the construction of data centers. Trump said it will create about 100,000 new jobs.

“What we want to do is we want to keep it in this country. China is a competitor and others are competitors,” Trump said. “We want – we want it to be in this country, and we’re making it available. I’m going to help a lot through emergency declarations, because we have an emergency. We have to get this stuff built.”

Oracle CEO Larry Ellison said the project is already underway, with 10 data centers currently under construction now in the Abilene, Texas area. Each building is roughly a half a million square feet. The Stargate joint venture is planning to build 10 more. New campus locations are currently being scouted.

“AI holds incredible promise for all of us, for every American,” Ellison said, citing just one of the applications of these projects, electronic health records.

Sam Altman, the CEO of OpenAI, called this one of the most important projects of this era that will create hundreds of thousands of jobs.

“I believe that, as this technology progresses, we will see diseases get cured at an unprecedented rate,” Altman said. “We will be amazed at how quickly we’re curing this cancer and that one and heart disease … I think will be among the most important things this technology does.”

$100 billion to be deployed immediately

OpenAI officials said that $100 billion of the $500 billion investment will be deployed immediately.

“This infrastructure will secure American leadership in AI, create hundreds of thousands of American jobs, and generate massive economic benefit for the entire world,” OpenAI officials said. “This project will not only support the re-industrialization of the United States but also provide a strategic capability to protect the national security of America and its allies.”

SoftBank will have financial responsibility for the project while OpenAI will have operational responsibility.  Arm, Microsoft, NVIDIA, Oracle, and OpenAI are the initial technology partners.

Oracle, NVIDIA, and OpenAI will work together to build and operate the computing system. Further, OpenAI will work with Microsoft to train models.

A catalyst for more AI spending

Oracle stock was trending about 1% higher on Thursday after rising 7% on Wednesday. The stock is currently trading at about $186 per share. It has returned about 63% over the past 123 months and has a median price target of $205 per share, which would suggest a 10% gain. It has a P/E ratio of 45 and a forward P/E of 30.

Analysts at Wedbush believe this project could have a knock on effect of spurring more AI data center development.

“We believe this is the start of a wave of massive AI investments to take place in the US as we expect more big tech players to make announcements over the coming weeks,” Wedbush analysts wrote in a research note, reported Seeking Alpha.

“We ultimately believe another $1 trillion of US AI investments could be committed by the rest of the Big Tech world as momentum builds in Silicon Valley,” Wedbush analysts continued.

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