Oracle Shares Surge as Trump Announces $500 Billion Data Center Investment
Oracle shares surged by 9% on January 22 after the US President’s announcement that the company will be making a huge investment in AI infrastructure. According to Reuters, Oracle will be teaming up with SoftBank and OpenAI in a joint venture dubbed Stargate.
Rivaling China
Through the Stargate joint venture, the three companies will be investing a total of $500 billion to enable the US to stay ahead of rival countries like China in the global AI race. Announcing the private sector investment at the White House, Trump said the investment by OpenAI, Oracle, and SoftBank will go towards building data centers in the US.
The President also said that the joint venture will create in excess of 100,000 jobs in the US. The venture will be deploying the first batch of $100 billion US AI investment immediately. The balance will be deployed over the next four years.
Trump announced the AI investment in the presence of Oracle Chairman Larry Ellison, SoftBank CEO Masayoshi Son, and OpenAI CEO Sam Altman.
Ellison said that establishment of the first set of data centers has already commenced in Texas. He added that twenty more data centers will be constructed, each measuring half a million square feet. Ellison says the new data center project has the capacity to power AI that analyzes electronic health records, enabling doctors to better care for their patients.
Market Reaction
Besides Oracle’s share rise, stocks for other tech companies have increased since Trump’s AI initiative announcement. Nvidia stocks rose by 2.7% while those of Microsoft increased by 1.1%.
“We believe this is the start of a wave of massive AI investments to take place in the U.S. as we expect more big tech players to make announcements over the coming weeks,” Wedbush analyst Dan Ives said.
Vistra stocks also gained 3.8% value. Vistra is a nuclear power company whose shares have increased more than four times in the last one year. Vistra’s share surge has been attributed to rising demand for clean energy for data centers.
Shares for Super Micro Computer rose by 2.7%. On January 21, Oracle shares rose by 7% as reports of the joint venture circulated. Nvidia and Dell stocks also recorded an increase on the same day.
Demand for Energy
Trump’s AI investment announcement comes just a day after the US President rolled back on Biden’s administration AI order that was aimed at lowering the risks that AI poses to workers, consumers and national security. AI requires massive computing power. This pushes the demand for specialized data centers that allow tech firms to connect thousands of chips in clusters. High amounts of electricity are also needed to power data centers.
“They have to produce a lot of electricity, and we’ll make it possible for them to get that production done very easily at their own plants if they want,” Trump said.
AI data centers are increasing US power consumption significantly. Last year, the North American Electric Reliability Corporation said about 50% of the country faces increased risk of power shortfall over the next decade.
AI investments have increased significantly since OpenAI unveiled ChatGPT in 2022. Since then, businesses in different sectors have been seeking to integrate AI into their services and products.
