Author : Akshita Jain | EQmint | Finance News
Both OpenAI and SoftBank Group will invest $1 billion in SB Energy, contributing $500 million each.
This will help SB Energy expand its position as a builder and operator of large-scale energy and data centre infrastructure in the United States, and in particular to support OpenAI’s “Stargate,” a multi-hundred-billion-dollar project to create next-generation AI data centres.
The deal also has SB Energy selected to construct and operate a 1.2-gigawatt data centre in Milam County, Texas, which will house the high-performance computing systems that train and run advanced AI models.
This investment reflects the growing demand for custom infrastructure to meet the growing demand for power and computing power that modern AI models require. The tech industry is increasingly looking to secure reliable energy and data centre capacity as companies seek to scale their AI systems.
Meanwhile, OpenAI is facing mounting costs to train and operate its AI systems as competition grows, primarily from Google’s Alphabet and Gemini models. The company has apparently entered a “code red” phase to try to improve its core products in response to this pressure.
Stargate’s $500B AI Data Center Expansion
SB Energy, a SoftBank-owned company, will build and operate OpenAI’s previously announced 1.2-gigawatt data center in Milam County, Texas. SB Energy will also become a client of OpenAI, using its APIs and offering ChatGPT to employees. Stargate is a $500 billion multi-year project to create AI data centres for training and inference, with backing from big investors like Oracle. President Donald Trump supported the program when the firms announced the plan in January 2025.
As access to energy is a key constraint in expanding AI, tech firms are investing directly in power infrastructure, with the push for larger and more numerous data centres driving up electricity demand.
SB Energy is developing several data-centre campuses, the first of which is expected to open this year.
Power is the key to achieving large tech firms‘ ambitious AI ambitions. That has created a race for energy to power more and larger data centers – and is driving up electricity demand.
Some are using suppliers or plants, or assembling their own energy sources, because of the need for power. On Friday, Meta Platforms Inc. announced it has entered into agreements that could eventually produce more than 6 gigawatts of nuclear power.
SB Energy, a longtime SoftBank-supported energy company, was founded as a developer of renewables and storage, but has since expanded into the development, ownership, and operation of data centers. The new funding for AI Training and Inference follows the $800 million SB Energy announced last year from Ares Infrastructure Opportunities funds.
AI Data Center Boom Drives Costs as OpenAI Enters “Code Red”
The partnership “accelerates our delivery of advanced AI data center campuses and associated energy infrastructure at the scale necessary to advance Stargate and secure America’s AI future,” SB Energy co-CEO Rich Hossfeld said. The boom in data centre construction has also forced major players such as Meta Platforms to invest massive sums in infrastructure projects that require large investments in chips, power, cooling and servers.
Meanwhile, OpenAI is facing ever more expensive training and maintenance costs for its AI systems as it battles Google, Alphabet’s competitor.
Late last year, CEO Sam Altman told staff that the company was “code red” in trying to improve ChatGPT, but not to launch other products as Gemini began to gain momentum.
SoftBank–OpenAI Stargate Partnership Expands
The deal with SoftBank and OpenAI joins a growing number of unrelated deals between tech firms that are helping to support the Al sector and raising concerns about the consequences if demand for artificial intelligence falls short of expectations. SoftBank is one of OpenAI‘s largest investors.
The SB Energy deal builds on OpenAI’s Stargate initiative, an AI startup-led venture between the AI startup and its partners, SoftBank and Oracle Corp, with the goal of spending $500 billion in US data centers and infrastructure for AI over four years. The first site is a gigantic data center in Abilene, Texas, which was built by Oracle with Crusoe as the development partner.
Conclusion
The OpenAI–SoftBank investment in SB Energy is evidence of a paradigm shift in the AI race: power and infrastructure are now as important as algorithms. As Stargate’s $500 billion project progresses, big tech firms are increasingly focusing on energy, data centers, and computing power. While this vertical integration strengthens OpenAI’s scale and ability to compete with competitors such as Google, it also highlights the growing financial and operational risks associated with capital investments.
If demand for AI continues to rise, these investments could represent the next stage of technological leadership – but if expectations fail, the level of spending could put the sector under enormous pressure.
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Resource Link : Reuters
