Stargate's Winners: ORCL, NVDA, MSFT, ARM
US’s Stargate Project.
On Tue, 21 Jan 2025 President Trump announced billions in private sector investments to grow artificial intelligence in the US and build massive new data centers for OpenAI.
The Big Picture.
It is official.
4 companies will convene under a joint venture (JV) called “Stargate”.
The 4 companies are:
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OpenAI.
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SoftBank where Masayoshi Son will be the chairman of Stargate.
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UAE's MGX - an Emirati investment firm specializing in AI technologies, launched by the Abu Dhabi government in 2024.
Collectively, they will commit $100 billion for the startup immediately, with the remaining $400 billion to be invested over the next 4 years.
This will help the US stay ahead of China and other rivals in the global AI race, said Mr Trump.
Oracle’s CTO Larry Ellison has also revealed:
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10 data centres, each 500,000 square feet, were already under construction in Abilene, Texas.
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10 more data centres are in the works.
As a result, Oracle shares jumped nearly +9% before the bell on Wed, 22 Jan 2025. (see below)
Stock price as of 23 Jan 2025
Other joint venture (JV) partners.
$NVIDIA(NVDA)$ is the official (natural choice) chip supplier for this venture.
It rose by +2.7% intraday. By endday, it was up +4.43%. (see below)
Stock price as of 23 Jan 2025
Stock price as of 23 Jan 2025
Stock price as of 23 Jan 2025
The other 2 tech partners also gained intraday., with Microsoft(MSFT)$ up +1.1% and ARM Holdings(AMR)$ climbing +5.5%. (see above)
By now, you would have noticed that all 4 stocks “peaked” on Wednesday, the day after Stargate announcement and most have experienced mild pull back thereafter.
Wedbush, Analyst, Dan Ives has commented:
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"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".
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$Tesla Motors(TSLA)$ CEO was the first to make unconstructive comments about the Stargate project alright. (see below)
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Guessed he must be pissed for not being asked to run Stargate or invest in it, hence the scathing remarks. Typical.
Fringe Industry Benefits.
As artificial intelligence (AI) consumes a lot of energy, needed to power its computing power, boosting the demand for specialized data centers and electricity needed to power them.
AI systems require a lot of energy to operate, which increases the need for more powerful data centers and the electricity to run them.
As a result, this has benefitted companies that are potential suppliers of hyperscales and electricity.
Below are some salient examples.
(1) $Vistra Energy Corp.(VST)$.
On Wed, 22 Jan 2025, Nuclear power company Vistra stock rose +3.8%. (see below)
Stock price as of 23 Jan 2025
Over the past 12 months, its shares have surged more than +300%, due to increasing demand for clean, sustainable energy for data centers.
(2) $Dell Technologies Inc.(DELL)$ & Super Micro Computer(SMCI)$
AI server makers' shares also gained.
Dell is up +4.3% and Super Micro Computer rose by +2.7%. (see below)
Stock price as of 23 Jan 2025
Stock price as of 23 Jan 2025
(3) Palantir Technologies(PLTR)$.
Even unrelated AI stock like data analytics firm Palantir saw modest gains (eg. +2.20%) in its stock price. (see below)
My personal views: (mine only)
Project Stargate is an ambitious project.
It has the potential to:
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Revolutionize industries.
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Boost economic growth.
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Enhance national security.
It also raises concerns about:
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Ethical implications.
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Job displacement.
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Potential for misuse.
Its success hinges on foreign immigrant labours that are IT-skilled, something US is lacking.
Even most US R&D departments intellectuals are a mixed of locals and foreign elites.
According to the December 2024 report by US chamber of commerce, there exists “severe” shortages of skilled labour in the Financial and Professional & business service sectors. (see above)
With the returning president pressing ahead with “illegal immigrants” repatriation, Stargate success is not guarantee. (see above)
Will have to see how all these many things will play out over the course of time.
Personally, all the Executive Orders signed by the president (on day one upon return to office) for enactment, is either a callous act or something just for show, without considerations on the consequences.
For the immediate future, all companies (stocks) involved in Stargate project will bask in the limelight for a wee while longer until reality sets in.
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Do you think a successful AI Centre in the US will be a huge challenge with a lot of risks ?
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Do you think the US president has rushed thru, too many Executive Orders without understanding what is really necessary to revive US economy ?
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