Nvidia and Oracle's Stargate: A $25 Billion Play for AI Supremacy

Harrison BrooksMonday, Jun 2, 2025 11:49 am ET
118min read

The race to dominate artificial intelligence infrastructure has entered a new era with the launch of Nvidia and Oracle's $40 billion Stargate AI data center in Abilene, Texas. This 1.2 gigawatt behemoth—housing 400,000 of Nvidia's cutting-edge GB200 “superchips”—is not merely a data center. It is a fortress of computational power, designed to capture a multi-billion-dollar slice of the AI arms race. For investors, this partnership represents a rare opportunity to bet on two industry titans poised to redefine the future of cloud computing, while capitalizing on OpenAI's insatiable demand for scalable AI infrastructure.

The Scale of Stargate: A Computational Colossus

The Stargate facility's architecture is staggering. Each GB200 superchip—a fusion of two Blackwell GPUs and a Grace CPU—delivers 1.4 exaFLOPS of sparse FP4 compute power, the gold standard for training large language models. When fully operational by mid-2026, the 875-acre campus will wield 16 zettaFLOPS of compute capacity, rivaling the world's most advanced supercomputers. To put this in perspective, reflects its dominance in GPU-driven AI, but Stargate could amplify this advantage exponentially.

The project's international expansion underscores its ambition. A UAE-based sister facility, built in partnership with G42 Cloud, will add 2 million GB200 chips by 2026, doubling Stargate's global footprint. This dual-hub strategy positions Nvidia and Oracle to corner markets in both North America and the Middle East, where governments are pouring trillions into AI infrastructure.

The Revenue Machine: Capturing $25B+ by 2029

Analysts at UBS estimate that the 400,000 GB200 deployment alone could generate $20 billion in sales for Nvidia, with Oracle's cloud infrastructure business securing over $2 billion annually from hosting and managing these workloads. Combined, the duo stands to capture at least $25 billion in cumulative revenue by 2029—a figure that grows if OpenAI's compute needs expand as predicted.

Consider the tailwinds:
1. OpenAI's Dependency: ChatGPT and its successors require unfathomable compute resources. Stargate's modular design allows Oracle to allocate GPUs to cost-efficient workloads like inference and reinforcement learning, reducing OpenAI's reliance on Microsoft's Azure.
2. Competitive Displacement: Microsoft's cloud lead is under threat. While Azure has long hosted OpenAI's models, Stargate's sheer scale and lower power costs ($0.02 per hour for GPU instances vs. Azure's $0.05) could force renegotiation of contracts.
3. Secular Shift to Specialization: The global AI Infrastructure Fund—backed by BlackRock, Microsoft, and MGX—is pouring $30 billion into specialized data centers. Stargate is not just a project; it is a template for this new era of compute.

Risks on the Horizon—and Why They're Manageable

Critics will cite execution risks: Texas's power grid instability, the $15 billion funding gap from Crusoe and Blue Owl Capital, and consumer GPU shortages as Nvidia diverts production to enterprise. Yet these hurdles are outweighed by two critical advantages:
- Early Mover Scale: Competitors like AMD's MI300 and Intel's Ponte Vecchio lag in both compute density and ecosystem integration. Stargate's GB200 deployment creates a moat too wide to breach.
- Oracle's Cloud Synergy: reveal a company transforming its cloud business. By 2026, Oracle could command 15% of the AI cloud market—up from 5% today—driven by Stargate's unique value proposition.

The Call to Action: A Paradigm Shift in Play

The AI infrastructure boom is no fad. With Meta's 2.2 gigawatt Louisiana data center and Elon Musk's Colossus project also vying for dominance, the market's winners will be those who control both hardware and software at scale. Nvidia and Oracle are already ahead:

  • Nvidia's Cash Flow: Its $40 billion upfront payment from Oracle alone secures years of R&D investment, while enterprise GPU sales carry 60%+ gross margins versus 40% for consumer chips.
  • Oracle's Profitability: By 2029, Stargate's cloud margins could hit 35%, up from 25% today, as utilization rates climb.

Investors who wait risk missing the inflection point. The Stargate project is a generational bet on two companies building the backbone of the AI economy. With a global AI compute market projected to hit $1 trillion by 2030, the question isn't whether to act—it's why you're waiting.

This article is for informational purposes only. Always conduct independent research and consult a financial advisor before making investment decisions.

Comments



Add a public comment...
No comments

No comments yet

Disclaimer: The news articles available on this platform are generated in whole or in part by artificial intelligence and may not have been reviewed or fact checked by human editors. While we make reasonable efforts to ensure the quality and accuracy of the content, we make no representations or warranties, express or implied, as to the truthfulness, reliability, completeness, or timeliness of any information provided. It is your sole responsibility to independently verify any facts, statements, or claims prior to acting upon them. Ainvest Fintech Inc expressly disclaims all liability for any loss, damage, or harm arising from the use of or reliance on AI-generated content, including but not limited to direct, indirect, incidental, or consequential damages.