Hello and welcome to Eye on AI. In today’s edition…It’s AI infrastructure week (or decade); OpenAI and Microsoft open up their relationship; Google invests another billion in Anthropic; Databricks closes a whopping $10 billion round; Inside Google’s rush to sell AI tools for war; and OpenAI ups its lobbying spend.
As the U.S. changed presidential administrations this week, AI infrastructure dominated the old and the new.
One of Joe Biden’s final acts before leaving office was signing an executive order focused on making federal sites available for private sector companies to build data centers and clean energy facilities, as well as speeding up the time it takes to obtain permits and connect new facilities to the grid. Days later, one of Donald Trump's first acts was announcing “The Stargate Project,” billed as a four-year, $500 billion investment in AI infrastructure from OpenAI, SoftBank, Oracle, and MGX that will “secure American leadership in AI, create hundreds of thousands of American jobs, and generate massive economic benefit for the entire world.”
You’d be right to have some questions about Stargate. But one thing is clear: AI infrastructure is taking center stage across the tech industry, power sector, and political landscape.
AI infrastructure gets political
When you get into the details, the Stargate announcement starts to look like a bunch of previously announced deals and loose plans being cobbled together into a “new” initiative to give Trump an early political win, as tech investor and commentator M.G. Siegler breaks down well in his Spyglass newsletter, calling it a ”catch-all of convenience for many of the parties involved.”
Where exactly all those billions will come from is not yet clear (even Elon Musk sniped the announcement, posting, “They don’t actually have the money”). The Texas site mentioned in the announcement seemingly refers to a data center that Oracle has already been building for quite some time. And the timing with Trump’s return to office is awfully convenient, as is the venture’s four-year timeline.
But Stargate does reveal how AI infrastructure is emerging as a top priority, funding magnet, and political target in America.
Data center and energy projects sweep the U.S.
Regardless of the political positioning of Stargate, big AI-related infrastructure projects are already well underway across the United States, with the cloud hyperscalers and savvy real estate developers locking up locations with excess power capacity. Meanwhile, utility companies are scrambling to find power to supply the new data centers.
AWS this month announced plans to invest at least $11 billion into cloud and AI infrastructure in Georgia, which has become a hot spot for big tech’s infrastructure with Microsoft, Google, Meta, and X all building in the state. The company previously said it’s spending a similar $11 billion in Indiana, and in November, announced it’s pursuing three nuclear projects in Virginia and Washington state.
Microsoft similarly kicked off the new year by announcing plans to invest about $80 billion into constructing data centers for AI in the fiscal year 2025 alone, with over half of it taking place in the U.S. Meta recently announced plans to build its largest AI data center yet—a $10 billion facility—in Louisiana, and OpenAI executives said the company plans to build its own data centers in the U.S. Midwest and Southwest.
Yesterday, the Wall Street Journal reported that South Carolina and its state-owned power provider Santee Cooper are working to reboot a giant nuclear project to meet the growing energy demands posed by AI—yet another showing of how AI is driving a resurgence of interest in nuclear power. The state is seeking proposals and betting that the project will be of high interest to the many tech companies scrambling to build data centers and infrastructure to power them. A similar story is playing out in Wisconsin, where a developer is working to turn a 1,000 acre farm into a data center with hopes that a tech company eager to power its AI ambitions will scoop it up. The site is less than an hour from a Microsoft data center that’s currently under construction.
The implications of this AI infrastructure build out stretch beyond simply more capable AI models for business and consumers. States are competing to attract AI infrastructure, hoping it will boost local economies. AI may push the U.S. to modernize its electrical grid, but it poses environmental concerns, such as the massive amounts of water data centers require for cooling (not to mention issues around nuclear waste disposal). There are regulatory challenges and national security concerns, especially as AI comes to be seen as a critical national technology and point of geopolitical tension. Infrastructure sometimes gets a reputation as being boring, but this is anything but.
And with that, here’s more AI news.
Sage Lazzaro
sage.lazzaro@consultant.fortune.com
sagelazzaro.com
