Microsoft and OpenAI are planning a massive $100 billion AI supercomputer dubbed "Stargate"

Why it matters: The AI arms race between tech titans is heating up, and Microsoft and OpenAI are gearing up for an absolute behemoth of a project. The partners plan to build a massive US-based data center codenamed "Stargate" that could have an 12-figure price tag.

The Information reports that Microsoft and OpenAI are in the early planning stages for an enormously ambitious new AI supercomputer installation. Unnamed sources state executives peg the budget at $100 billion for the US-based facility, which could house millions of cutting-edge AI chips.

The proposed Stargate data center would be the largest of five AI installations that Microsoft and OpenAI aim to develop over the next six years as part of their multi-year partnership. If the enormous project goes smoothly, Stargate should become operational by 2028.

While the plan remains fluid, Microsoft would likely finance the lion's share of the $100 billion project--a staggering sum around 100 times more than some of the most sprawling data centers today. The partners are evaluating potential chip suppliers, including Nvidia and AMD. Microsoft is even considering self-supplying Stargate's hardware needs. The facility's design may require innovations like denser server racks and newer cooling solutions to handle immense computational workloads and heat output.

Microsoft's partnership with OpenAI dates back to 2019. The companies have already jointly built multiple large AI supercomputer systems as they race to develop the best ChatGPT model and other generative AI technologies. Their current "Phase 3" installation is already operational.

In the short term, Microsoft already approved a $1 billion data center expansion in Mount Pleasant, Wisconsin, that could grow into a $10 billion "Phase 4" system expected to go live in 2026. OpenAI's next AI model upgrade is also reportedly slated for early 2025 release.

The potential $115 billion price tag for all of Microsoft and OpenAI's proposed future AI projects dwarfs Microsoft's current $50 billion annual spending on its global Azure data center infrastructure. However, the deepening ties between the two companies and the rapid escalation of their AI ambitions have drawn increasing regulatory scrutiny in the US, UK, and Europe over competition concerns.

Should it come to fruition, the unprecedented scale of the Stargate facility highlights how an arms race mentality is now driving firms to make economy-shaping investments in the field.