Musk Throws Cold Water on Trump’s $500B AI Dream: “They Don’t Have the Money”

Elon Musk questions the validity of the $500B Stargate AI project backed by Trump, claiming it lacks the necessary funding. The clash with OpenAI CEO Sam Altman raises doubts about the future of the ambitious AI infrastructure plan.

Washington: Elon Musk is clashing with OpenAI CEO Sam Altman over the Stargate artificial intelligence (AI) infrastructure project, which has garnered the support of US President Donald Trump. This is the latest chapter in an ongoing feud between the two tech billionaires that began on OpenAI’s board and is now testing Musk’s influence with the new president.

The Stargate AI Project

On Tuesday, Trump promoted a joint venture that aims to invest up to USD 500 billion through a new partnership involving OpenAI, the maker of ChatGPT, alongside Oracle and SoftBank. The new entity, Stargate, is already starting to build data centres and the necessary electricity generation to support the further development of fast-evolving AI technologies.

Trump hailed it as “a resounding declaration of confidence in America’s potential” under his new administration, with an initial private investment of USD 100 billion, which could increase up to five times that amount.

Musk’s Response

However, Musk, a close advisor to Trump who helped fund his campaign and now leads a government cost-cutting initiative, questioned the validity of the investment. On his social media platform X, Musk wrote, “They don’t actually have the money.”

Musk continued, “SoftBank has well under USD 10B secured. I have that on good authority.”

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Altman’s Counter

Altman quickly responded on Wednesday, stating that Musk was “wrong, as you surely know,” and invited Musk to visit the first site in Texas, which is already under construction.

Altman added, “This is great for the country. I realize what is great for the country isn’t always what’s optimal for your companies, but in your new role I hope you’ll mostly put (America) first,” concluding with a US flag emoji.

Behind the Feud

This public clash is part of a longstanding dispute between Musk and Altman that dates back to their days on OpenAI’s board. Musk, an early OpenAI investor and board member, sued the company last year, alleging it had betrayed its founding goals of being a nonprofit research lab that benefited the public good, instead of pursuing profits.

Musk has since escalated the issue with new claims and is seeking a court order to stop OpenAI’s plan to become more profit driven. A hearing is scheduled for early February in California federal court.

Meanwhile, Musk has launched his own rival AI company, xAI, and is building a large data centre in Memphis, Tennessee. He argues that his company faces unfair competition from OpenAI and its partner, Microsoft, which has provided the computing resources for AI systems such as ChatGPT.

The Stargate Timeline

Tech news outlet The Information first reported on OpenAI’s Stargate data centre project in March 2024, indicating that the project was already in development well before Trump’s announcement.

In July 2024, another company, Crusoe Energy Systems, revealed it was building a large AI data centre outside Abilene, Texas, at a site operated by energy technology company Lancium. The project, which is powered by renewable energy sources like nearby solar farms, was described as “supported by a multibillion-dollar investment,” though the backers were not disclosed.

Crusoe and Lancium stated their goal were to “deliver the maximum amount of green energy at the lowest possible cost.” It’s unclear how and when this project evolved into the first phase of the Stargate investment revealed by Trump.

Oracle co-founder Larry Ellison mentioned that the Abilene project is the first of about 10 data centres being built, with the number potentially expanding to 20.

The Absence of Microsoft

Notably absent from Trump’s press conference on Tuesday was Microsoft, a longtime partner of OpenAI. Microsoft has invested billions into OpenAI and has provided computing resources to build the models behind ChatGPT and other generative AI tools.

Microsoft confirmed this week that it is also investing in the Stargate project but stated that its partnership with OpenAI would “evolve” to help build additional capacity, primarily for research and model training.

During an interview at the World Economic Forum in Davos, Switzerland, when asked about Musk’s comments on Stargate, Microsoft CEO Satya Nadella deflected by highlighting his company’s own USD 80 billion plan to expand its global AI infrastructure, with USD 50 billion of that being spent in the United States.

Nadella jokingly said, “Look, all I know is, I’m good for my USD 80 billion.”