In early 2025, OpenAI announced Stargate, a joint venture with Oracle and SoftBank, which aimed to invest $500 billion in AI data centers in the United States. But after more than a year of challenges and disagreements, it seems that the startup has abandoned the original idea of directly owning infrastructure alongside its two partners. According to the Financial Times, OpenAI now prefers to rely on third-party providers and lease capacity in the long term.
This is a sensible idea for the startup, which is burning through cash and has reportedly missed internal revenue targets in recent months. But it has also caused chaos among its partners and put its reliability into question. According to the report, OpenAI has "in practice... abandoned the joint venture," choosing instead large bilateral deals with Oracle and more. One person involved with Stargate reportedly said the company had "sidelined first-party data centres," while OpenAI itself admitted that Stargate is merely an "umbrella for our compute strategy."
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Other Stargate projects located in other areas have also been hit by uncertainties. The UK government signed a deal with OpenAI, among other partners, to build a data center in the UK, but the startup has put it on hold earlier this month. It cited “restrictive regulations” and “high energy costs” as the reason behind the move, but UK AI Minister Kanishka Narayan told the Financial Times that the “only thing that has changed [since] the moment of those commitments…has been the financing environment for OpenAI.”
All these changes have got some partners “feeling let down and misled by OpenAI,” a person familiar with Microsoft’s decision said. Thankfully, the software giant has stepped in on some of the projects that the startup has supposedly abandoned. One source told the publication that money is not unlimited, no matter what Sam Altman might say, while another said that they prefer Microsoft over OpenAI as a tenant, as “they are more creditworthy.”
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