Trump’s project Stargate launches AI into new space race
The new Trump administration’s massive spending plan will certainly flow through to a handful of Australian companies already enabling artificial intelligence.
Business
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It’s little wonder Donald’s Trump’s monster AI venture has been called Stargate.
AI represents the new space race and America doesn’t want to lose control of the cutting-edge technology.
From Nvidia, Microsoft, Meta, OpenAI, Apple, Amazon, Alphabet and even Elon Musk’s Tesla the US is streets ahead of anyone else in artificial intelligence. The sums already invested will keep it that way for now.
Unlike the space race, it’s not Russia on the other side of the AI development curve. It’s China.
But Trump’s project – backed by Larry Ellison’s Oracle, Masayoshi Son of Japan’s SoftBank, and OpenAI chief Sam Altman – committed an extraordinary $US500bn ($800bn) to build out a physical network of data centres and the energy infrastructure to power all the computing brute force needed to run generative AI models.
This investment comes on top of an already heated market for AI whereby the big tech players – essentially the so-called Magnificent Seven stocks – have committed about $US200bn on AI investment this coming year. That’s across all kinds of infrastructure, from data centres, chips, research as well as energy.
Trump was clear about the motivation for a project like Stargate. “It will ensure the future of technology. What we want to do is we want to keep it in this country,” he said at the White House, alongside Ellison, Son and Altman.
“China’s a competitor and others are competitors. We want it to be in this country.”
Big companies are already embracing it and AI is set to underpin all parts of the economy in coming decades. Australian players, including everything from banks to telcos, are investing hundreds of millions of dollars in development. For the sake of economic security, Trump sees it as crucial for the US to maintain its hold on the technology.
While China is still relatively early in its AI development, it has the ambition and the drive to catch up. Just this week it fired off a new $US8bn AI investment fund to help pay for the development of the technology there.
Even if it faces import bans on much-needed chips, this hasn’t stopped China getting a foothold on all kinds of tech, and it is now overtaking the US as the world’s biggest electric vehicle manufacturer.
In brief remarks at the White House, OpenAI’s Altman said Stargate “will be the most important project of the era”, creating hundreds of thousands of jobs.
It would deliver a major boost to healthcare and research with diseases cured “at an unprecedented rate”, he said.
While the details were thin, Stargate’s three backers won’t be able to deliver on the project alone, and the massive spending involved will certainly flow through to a handful of Australian companies which are enabling AI.
Goodman Group shares have surged, as the smart warehouse developer has moved into hyperscale data centres in recent years. Today, data centres currently represent approximately 40 per cent and the fastest growing part of Goodman’s near $13bn forward order book. However, while the US is Goodman’s third-biggest market for smart warehouses, it only has a small data centre footprint there and is determined to get bigger.
“The growth in the US economy is important to Goodman, so we’re watching the change in approach closely,” chief executive Greg Goodman recently told The Australian’s CEO Survey.
For investment bank Macquarie, which counts the US as its second-biggest market, the spending plays into its core theme of digitalisation and building out digital infrastructure in its asset management arm.
Access to power is the other part of the puzzle, and Macquarie is one of the biggest energy traders across the US.
Macquarie last year sold its Sydney-headquartered AirTrunk data centre developer to US investment giant Blackstone for a stunning $24bn.
Air Trunk has built its hyperscale data centres across Asia, but part of the motivation behind the deal was the expertise the Australian developer has in bringing massive data centres to market. Blackstone will now be eyeing the opportunities.
Beyond direct tech infrastructure, more power means more copper, with BHP and Rio Tinto jointly owning the Resolution copper project in Arizona that has long been held up on approvals. Both miners are also spending billions of dollars in other parts of the world, as well as here, bringing copper to market.
AI investment is no longer a new thing, however the Stargate investment represents the single biggest commitment.
Indeed, it probably marks the high point of the first phase of the AI boom, which is around building out of the software and all the hardware to support the technology.
Within a decade, the US is likely to benefit from a different kind of AI dividend. Even if some players get burnt from a tech overspend, there’s a big productivity lift waiting as AI is integrated into business models, distribution and production strategies.
And that too will also lift the fast adopters in Australian business.
Originally published as Trump’s project Stargate launches AI into new space race
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