- ‘Hardware is hard,’ Musk said, in response to the media report.
- The Information reported friction between OpenAI and Softbank over data center buildout, prompting OpenAI to seek other partners for computing capacity.
- OpenAI has reportedly scaled back its AI spending plans, now targeting roughly $600 billion in investment through 2030.
Elon Musk appears to be having an “I told you so” moment. On Sunday, the billionaire tech entrepreneur reiterated his earlier claim that OpenAI would struggle to fund and execute its ambitious Stargate project, following a new media report that the Sam Altman-led company had encountered hurdles.
The Information, citing sources, reported that the planned $500 billion Stargate initiative, a vast network of AI data centers, has run into significant roadblocks, prompting OpenAI to adjust its strategy and pursue computing-capacity deals outside its partnership with SoftBank Group.
Musk Quips
“Hardware is hard,” Musk posted on X, in response to the report. “Those who have tried to do so at scale will understand,” he said in another post. The comments are a continuation of Musk’s view: when OpenAI announced Stargate in January 2025, he questioned the project’s viability and posted, “They don’t actually have the money.”
The Stargate joint venture between OpenAI, Oracle and SoftBank hasn’t staffed up and isn’t building OpenAI’s data centers, The Information reported.
OpenAI, SoftBank Clash Over Stargate Plan
OpenAI and SoftBank have reportedly clashed over fundamental issues, including where to build the data centers and how to manage the projects. As part of Stargate, SoftBank is developing major data center projects in Texas; OpenAI had hoped that one of them would become its first self-built data center. However, SoftBank has pushed to keep control of the site.
After months of talks, a compromise was reached: OpenAI would sign the long-term lease and control the facility’s design. SoftBank Energy would develop and own it.
Meanwhile, OpenAI bypassed the Stargate framework to sign a massive $30 billion-a-year deal with Oracle last year and has also deepened its relationship with CoreWeave. The Information reported that OpenAI has shifted its priorities and no longer considers building its own data center a top priority.
OpenAI Reins In Expenditure
In related news, CNBC reported over the weekend that the AI company is now telling investors it will spend $600 billion on AI infrastructure through 2030, a figure significantly lower than the $1.4 trillion Altman had touted just a few months ago.
The developments come amid fresh fears about AI investments by top companies and whether they will deliver proportional gains in the future. Those fears, coupled with eye-popping expenditure plans from cloud companies, have led to a broad selloff in tech stocks.
Musk Vs Altman
Musk, one of the co-founders when OpenAI started as a research lab in 2015, has been a vocal critic of OpenAI and Altman. He sued OpenAI over what he believes is the company’s reversal of its stated business goals after converting to a for-profit entity; in another lawsuit, Musk has complained that OpenAI and Apple were indulging in unfair business practices by promoting ChatGPT on Apple’s App Store.
Altman has routinely hit back, too. On the sidelines of the AI Summit in India, he said Musk’s plan to build data centers in space was “ridiculous”.
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