Microsoft and OpenAI Unveil Plans for Landmark $100 Billion AI Supercomputer “Stargate

Microsoft shares (NASDAQ: MSFT) are slightly down in the premarket, dropping 0.39% after ending the day up 0.92% yesterday.

In a landmark collaboration set to potentially redefine the tech landscape, Microsoft and OpenAI have announced an ambitious project to build a $100 billion artificial intelligence supercomputer, dubbed Stargate, which is prepared for launch in 2028. This initiative aims to create a sophisticated AI data centre infrastructure capable of handling increasingly complex tasks that exceed the capabilities of traditional data centres.

As part of this expansive vision, the project outlines a multi-phase development cycle, with Stargate representing the fifth phase. This suggests an ongoing commitment to innovation and expansion in the colossally competitive space of artificial intelligence and computing infrastructure.

Central to this effort is Microsoft's partnership with leading chip manufacturers, including Nvidia (NASDAQ: NVDA up 0.89% in premarket), to design custom computing chips tailored to support the high demands of the project. Nvidia's contribution comes in the form of its cutting-edge AI chip, the Blackwell B200. Each B200 chip boasts 72 Blackwell GPUs and 36 Grace CPUs, indicating a significant leap forward in processing power and efficiency.

In the face of this competition, other chip giants aren't standing idle. AMD (NASDAQ: AMD down 0.91% in premarket trading) has stepped into the arena with the introduction of its MI300 series chips aimed at AI applications, challenging Nvidia's H100 series. Meanwhile, Intel has made its own play with the launch of the Intel Core Ultra, which features neural processing units, adding to the heated race for AI chip dominance.

Further solidifying its position in the AI sector, Microsoft has recently completed a strategic acquisition of Inflection AI's artificial intelligence software for a staggering $650 million. This deal also included the onboarding of Inflection's co-founders and employees, bringing exceptional talent under Microsoft's growing AI division.

Financial indicators look promising for Microsoft, which has pegged its Intelligent Cloud revenues to lie between $26 billion and $26.3 billion for the fiscal third quarter of 2024. Such projections underscore the company's confidence in its cloud-based services and software offerings.

As Microsoft and OpenAI gear up for the Stargate project, the implications for the future of AI, cloud computing, and data processing are significant. With a convergence of industry-leading hardware and software innovation, the market is set to witness yet another transformative leap, helmed by these two powerhouse entities.