(Bloomberg) — Elon Musk openly questioned whether companies that joined President Donald Trump’s announcement pledging hundreds of billions of dollars in artificial intelligence infrastructure could deliver on their promises, revealing a early internal divide within the White House.
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“They don’t really have any money,” Musk wrote on his social media platform X, hours after the announcement. “SoftBank got way less than $10 billion. I have it on good authority.
Trump was joined by Masayoshi Son of SoftBank Group Corp., Sam Altman of OpenAI and Larry Ellison of Oracle Corp. at the White House to announce the company, called Stargate, which they said would immediately deploy $100 billion with the goal of eventually spending $500 billion building data centers and physical campuses.
“That to me is a very important thing,” Trump said. “I think it’s going to be something very special.”
Altman took to X to challenge Musk’s characterization on Wednesday, calling it false and suggesting that Musk was upset because the deal could rival the billionaire’s own AI efforts.
The public spat underscored some of the tensions that could dominate Trump’s second term and echoes problems he faced during his last stint in the White House.
Trump’s penchant for presenting himself as a dealmaker led him to repeatedly tout private-sector promises to spend on the United States that never came to fruition or that represented pre-existing commitments that leaders repackaged to s attract the president’s favor. Some of those promises, like the aborted plan for a massive Foxconn industrial campus in Wisconsin that Trump dubbed the “eighth wonder of the world,” have become fodder for Democrats on the campaign trail.
The Stargate announcement immediately sparked skepticism about whether it would come to fruition or whether it represented new spending by companies.
According to the report, Altman told colleagues SoftBank and OpenAI that they planned to commit $19 billion each to Stargate for a matching 40% stake. They could tap capital markets in the future, the tech media outlet reported. Abu Dhabi-backed Oracle and MGX would each contribute around $7 billion, the media outlet cited the OpenAI chief as saying.
Aside from funding, questions also arise as to whether Stargate actually represents a dramatic increase over previously conceived plans.
Son had already announced plans to invest US$100 billion in AI during an event with Trump in December at the presidential estate of Mar-a-Lago, and Stargate is expected to dip into that kitty. SoftBank also faced immediate questions about where the company would obtain the capital needed to finance its initiative.
During Trump’s final term, Son raised his $100 billion Vision Fund with money from outside investors and invested that money in startups including WeWork, Uber Technologies Inc. and DoorDash Inc.
SoftBank doesn’t have the cash to deliver on Son’s promise this time around. The company had 3.8 trillion yen ($25 billion) in cash and equivalents on its balance sheet at the end of September. Nevertheless, the company’s finances recovered thanks to the IPO of chip design company Arm Holdings Plc. SoftBank still owns about 90% of Arm, which now has a market capitalization of about $160 billion.
Bloomberg previously reported that SoftBank could tap hyperscalers as part of a project financing program and turn tens of billions of dollars into hundreds of billions of dollars. But the effort could lead to calls for higher yields on future SoftBank bond issues.
Son has pledged to increase investment in artificial intelligence, which he described as a technology that will change virtually every business. SoftBank invested $500 million in OpenAI in October and aims to increase that investment by acquiring up to $1.5 billion of the startup’s shares through a tender offer for existing shareholders.
Musk’s influence
Musk’s role in the administration leading the new Department of Government Efficiency, a cost-cutting effort, has sparked questions about conflicts of interest, self-dealing and his ability to coexist with Trump.
Musk raised billions of dollars last year for xAI, a startup that seeks to compete with OpenAI. Democrats and government watchdogs have expressed concern that the billionaire could seek to roll back regulations and investigations into Tesla’s driver-assist features, and prevent investigations into the practices of Tesla. work in his businesses.
The Tesla Inc. chief executive’s choice of words in his message questioning the amount of money SoftBank had obtained was reminiscent of his clashes with the U.S. Securities and Exchange Commission in 2018. The agency accused Musk of having committed securities fraud after tweeting in August that year that he had obtained the “financing” needed to take the automaker private. He then reached a settlement with the SEC that required him to pay a $20 million penalty and relinquish his role as chairman of Tesla.
Musk’s companies have won multibillion-dollar government contracts, and their allies have suggested the new administration may seek to award more grants and contracts to SpaceX and its Starlink service. Trump also suggested Tuesday that he would be open to Musk buying TikTok, a social video app that competes with his own X platform.
The billionaire was an enthusiastic backer of Trump’s re-election efforts, but his off-the-cuff comments on social media seemed designed to create headaches at the White House.
White House Press Secretary Karoline Leavitt said Stargate would create “a minimum” of 100,000 new jobs when asked about Elon Musk’s comments on Fox News.
“The American people should take President Trump and his CEOs at their word,” she said. “These investments are coming to our great country, and American jobs are coming with them.”
–With help from Lynn Doan and Craig Trudell.
(Updates with reported property details beginning in ninth paragraph.)
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