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OpenAI and SoftBank Invest $1 Billion in SB Energy to Expand Stargate Data Center Buildout

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OpenAI and SoftBank Group will jointly invest $1 billion in SB Energy, committing $500 million each to accelerate the expansion of data center and power infrastructure for their Stargate initiative, SB Energy said on Friday.

SB Energy, which is owned by SoftBank, will build and operate OpenAI’s previously announced 1.2-gigawatt data center campus in Milam County, Texas. The facility is a key component of Stargate, a massive, multi-year plan to scale artificial intelligence training and inference capacity in the United States.

As part of the partnership, SB Energy will also become a customer of OpenAI, using its application programming interfaces and deploying ChatGPT internally for employees.

Stargate is a $500 billion initiative backed by major investors including Oracle, and was publicly endorsed by Donald Trump when the plan was unveiled in January 2025. The project reflects the scale at which leading AI developers are now operating as they race to secure computing power.

The deal highlights a broader industry shift in which technology companies are investing directly in energy and power infrastructure. Access to reliable electricity has become a critical bottleneck for AI expansion, as larger and more numerous data centers sharply increase power demand.

SB Energy said it is developing several data center campuses, with initial facilities expected to begin service later this year. “The partnership accelerates our delivery of advanced AI data center campuses and associated energy infrastructure at the scale required to advance Stargate and secure America’s AI future,” said SB Energy co-CEO Rich Hossfeld.

The data center construction boom has also driven rivals to commit unprecedented sums to infrastructure. Meta Platforms and other Big Tech firms have announced multi-billion-dollar investments spanning chips, cooling systems, servers and power generation.

At the same time, OpenAI is facing rapidly rising costs to train and operate its AI models amid intensifying competition from Alphabet’s Google. OpenAI CEO Sam Altman told employees late last year that the company had entered a “code red” phase, prioritising improvements to ChatGPT while delaying other product launches to counter Google’s Gemini gaining traction.

Musk’s xAI to Invest Over $20 Billion in Mississippi Data Center

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xAI, the artificial intelligence company founded by Elon Musk, will invest more than $20 billion to build a large-scale data center in Southaven, Mississippi, state Governor Tate Reeves said on Thursday.

The investment comes as booming demand for generative AI drives tech companies to sharply expand computing infrastructure. Data centers have become a focal point for spending by AI startups and hyperscalers seeking to train increasingly powerful models.

According to the governor’s statement, xAI expects to begin operations at the Southaven data center in February 2026. Musk had previously announced on December 30 that xAI had acquired a data center named “MACROHARDRR,” saying the facility would lift the company’s total computing capacity to 2 gigawatts, though he did not disclose the investment size or location at the time.

The Southaven site is located near a power plant recently acquired by xAI and close to its existing data center footprint in Memphis, Tennessee, the statement said. Memphis is home to xAI’s flagship supercomputer cluster, Colossus, which the company has described as the largest in the world.

The expansion highlights xAI’s aggressive push to compete more directly with leading AI developers such as OpenAI and Anthropic, whose ChatGPT and Claude models dominate much of the current generative AI market.

xAI’s spending underscores the heavy cash demands of the AI race. Bloomberg reported earlier on Thursday that the company burned $7.8 billion in cash during the first nine months of the year, reflecting the high cost of advanced data center hardware and large-scale model training.

Musk’s xAI buys third building to expand AI compute power

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xAI, the artificial intelligence company founded by Elon Musk, has acquired a third building as part of its effort to significantly expand computing capacity, Musk said on Tuesday. The move is aimed at boosting xAI’s training infrastructure to nearly 2 gigawatts of compute power.

The expansion highlights xAI’s ambition to compete more aggressively with leading AI developers such as OpenAI, which develops ChatGPT, and Anthropic, creator of the Claude chatbot. xAI’s main supercomputer cluster, known as Colossus and located in Memphis, Tennessee, has been described by Musk as the largest in the world.

“xAI has bought a third building called MACROHARDRR,” Musk wrote on X, without revealing the site’s exact location. The name appears to be a play on Microsoft, a major investor in OpenAI.

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The Information, which reported the development earlier citing property records and a person familiar with the matter, said the new building is intended to support a third large-scale data centre planned outside Memphis.

According to the report, xAI plans to expand Colossus to house at least 1 million graphics processing units (GPUs). The company is expected to begin converting the newly acquired warehouse into a data centre in 2026. Both the planned facility and a separate expansion known as Colossus 2 are located near a natural gas power plant that xAI is building, alongside access to other power sources.

The rapid build-out of AI infrastructure has drawn criticism from environmental groups, who warn that large data centres consume vast amounts of energy and place strain on local power grids.