Short Attention Span
Back in January we noted that President Trump announced , on his first day in office, the Stargate Project, a $500 billion dollar project to build 500,000 ft2 data centers across the US. The President outlined ‘Big beautiful buildings’ that would create over 100,000 jobs in partnership with Japan’s Softbank (9434.JP), Open AI (pvt) and Oracle (ORCL), the first of which actually started construction in mid-2024. The initial $100 billion was said to be deployed ‘…very, very quickly’. As the President’s speech warmed up, he noted that on the first day of his presidency his administration had already lined up $3 trillion in new US investments and expected to have a total of $6 - $7 trillion by the end of the first week.
The Stargate project, which bears an eerie resemblance (see our note “Stargate – Different This Time?”) to the Foxconn (2354.TT) ‘6th Wonder of the World’ display project in Wisconsin that the President touted during his first term, a project that is still looking for a purpose and has barely produced anything, although much of the Stargate Project is to be funded by private funds, rather than the public funds used for the Wisconsin project. Softbank is expected to directly fund 10% to 20% of the project with capital from its Vision Fund, with the rest of the capital coming from debt.
While Softbank met with a number of banks and PE firms in January. Those negotiations did not prove meaningful, and it seems that Softbank’s team of 20 to 30 has yet to complete the project financial plan and is now working on smaller project by project financing. In the interim a number of changes have occurred that are making it difficult to find investors willing to fund such a project. Those changes are:
While none of this is really surprising given the fact that the current administration is big on promises and light on details, it would mark another time when US politics overpromised and underdelivered. We expect more building will be built in Abilene (They were being built even before Project Stargate) but ‘very, very quickly’ already seems to be fading away. It’s a good thing that the public has a short attention span for such things or they might notice a pattern.
The Stargate project, which bears an eerie resemblance (see our note “Stargate – Different This Time?”) to the Foxconn (2354.TT) ‘6th Wonder of the World’ display project in Wisconsin that the President touted during his first term, a project that is still looking for a purpose and has barely produced anything, although much of the Stargate Project is to be funded by private funds, rather than the public funds used for the Wisconsin project. Softbank is expected to directly fund 10% to 20% of the project with capital from its Vision Fund, with the rest of the capital coming from debt.
While Softbank met with a number of banks and PE firms in January. Those negotiations did not prove meaningful, and it seems that Softbank’s team of 20 to 30 has yet to complete the project financial plan and is now working on smaller project by project financing. In the interim a number of changes have occurred that are making it difficult to find investors willing to fund such a project. Those changes are:
- China shocked the world with DeepSeek (pvt), a model that promises a much lower cost of training.
- Trump’s own tariffs are estimated to potentially add between 5% and 15% to the cost of data center construction.
- Fears of industry overcapacity as Microsoft (MSFT) cut back its data center plans and Amazon Cloud Services (AMZN) saw slower than expected growth.
While none of this is really surprising given the fact that the current administration is big on promises and light on details, it would mark another time when US politics overpromised and underdelivered. We expect more building will be built in Abilene (They were being built even before Project Stargate) but ‘very, very quickly’ already seems to be fading away. It’s a good thing that the public has a short attention span for such things or they might notice a pattern.
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