It was supposed to be a victory lap. In late January 2025, President Donald Trump stood in the Roosevelt Room, flanked by the titans of the "new" tech guard: Sam Altman of OpenAI, Masayoshi Son of SoftBank, and Larry Ellison of Oracle. The announcement was massive. They were launching "Stargate," a $500 billion joint venture aimed at building a galaxy of data centers across the United States. Trump called it the largest infrastructure project in history. He promised 100,000 jobs.
Then, Elon Musk logged onto X.
While the ink was still wet on the press releases, Musk—the man Trump tapped to lead the Department of Government Efficiency (DOGE)—didn't just poke holes in the plan; he tried to sink the whole ship. "They don't actually have the money," Musk posted. He didn't stop there. He claimed to have "good authority" that SoftBank had less than $10 billion of their committed portion actually secured.
Honestly, it’s a weird look. You’ve got the President's top efficiency advisor publicly trashing the President’s biggest tech initiative. But if you look at the history of these players, the drama makes a lot of sense.
The Stargate Friction: Money vs. Hype
The "Stargate" project isn't just a fancy name. It’s a roadmap for 2026 and beyond. The plan involves building gargantuan data centers, starting with ten massive buildings in Texas. Each one is roughly half a million square feet. The goal? To make sure the U.S. doesn't lose the AI arms race to China.
But Musk’s criticism hits a sensitive nerve: the difference between "committed" capital and "liquid" cash.
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Musk’s skepticism isn’t entirely baseless. SoftBank has a history of promising big numbers that don’t always materialize exactly as advertised—think back to the original Vision Fund era. By claiming they lack the funds, Musk is positioning himself as the "realist" in the room, contrasting with the "hype" he associates with Sam Altman.
Why Musk is Digging In
- The OpenAI Grudge: Musk co-founded OpenAI as a non-profit. He’s currently in a massive legal battle with them, recently filing a damages request for $134 billion. He views Altman’s pivot to a for-profit "Stargate" model as a betrayal of their original mission.
- DOGE Mandate: As the head of government efficiency, Musk is obsessed with ROI. If the government is providing "emergency declarations" and clearing regulatory paths for a project he thinks is financially flimsy, it violates his core philosophy of lean operations.
- xAI Competition: Musk has his own AI company. xAI isn't part of the Stargate alliance. When you're building your own supercomputer (like the "Colossus" cluster in Memphis), seeing your rivals get the presidential red carpet treatment is gotta sting.
Is the $500 Billion Real?
Microsoft’s Satya Nadella tried to play peacemaker—or at least stabilizer. Shortly after Musk's "funding not secured" tweets, Nadella went on CNBC to declare that Microsoft alone was "good for" $80 billion of the build-out.
It’s a game of chicken.
The Stargate venture relies on a mix of private equity, third-party debt, and corporate cash. Oracle has about $11 billion on its balance sheet. MGX (the UAE-backed fund) has massive capital. But the $500 billion figure is a four-year goal, not a pile of cash sitting in a vault today. Musk knows this. By framing it as "they don't have the money," he's technically right about the now, even if he’s arguably wrong about the eventual.
The Power Problem Nobody Talks About
While Musk and Altman bicker over bank accounts, a bigger monster is lurking in the shadows: the electrical grid.
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Google’s Global Head of Sustainability, Marsden Hanna, recently warned that the U.S. grid is the "single biggest obstacle" to this AI boom. You can have $500 billion, but if you can't plug the computers into the wall, you have a very expensive pile of bricks.
Kevin O’Leary recently echoed this, pointing out that China has built 500 gigawatts of power capacity in the last two years while the U.S. has struggled with permitting reform. This is where Musk’s criticism actually aligns with some industry fears. He’s often argued that we need a massive increase in electrical output—specifically nuclear—to make these AI dreams a reality.
What This Means for 2026
The rift between Musk and the Trump-backed AI alliance creates a strange "two-track" tech policy in Washington.
On one track, you have the "Stargate" group (OpenAI, Oracle, SoftBank, Microsoft) working directly with the White House on massive infrastructure. On the other, you have Musk and the DOGE team looking to slash "wasteful" spending and potentially questioning the subsidies or fast-track permits these very companies need.
What to watch for next:
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- The Jury Trial: Musk’s lawsuit against OpenAI is headed to trial in April 2026. If internal documents show OpenAI was "plotting" a for-profit flip earlier than they admitted, Musk gets a massive PR win.
- Permitting Reform: Trump has used executive orders to "remove red tape" for data centers. If DOGE finds these "fast tracks" are actually creating hidden costs or liabilities, expect Musk to use his X platform to scream about it.
- Grid Expansion: Look for whether the administration pivots to Musk's preferred energy solutions (like Tesla’s Megapacks or small modular nuclear reactors) to power the Stargate sites.
Actionable Insights for the AI Era
If you're following this saga to understand where the money is going, don't just look at the headlines.
Follow the "atoms," not just the bits. The real winners in the Stargate vs. Musk feud aren't just the software companies. Look at the companies building the power transformers, the cooling systems, and the physical real estate. Whether or not the $500 billion is fully liquid today, the intent to build is driving a massive shift in American industrial policy.
Diversify your AI exposure. Don't bet everything on the "Stargate" alliance. Musk's xAI and the open-source movement (which Trump’s "AI Action Plan" actually claims to support) are a hedge against a centralized AI monopoly.
Watch the grid. The success of any AI investment in 2026 depends on local permitting and energy availability. If you're looking at tech growth, look at the states like Texas and Virginia that are actually allowing power plants to be built. Without the juice, the AI revolution is just a very expensive PowerPoint presentation.