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Microsoft and OpenAI are reportedly collaborating on a billion-dollar data center initiative. This endeavor, dubbed "Stargate," aims to establish an AI supercomputer slated for launch in 2028.

Stargate is described as the fifth phase of a project that will cost somewhere between USD 100 billion and USD 115 billion, with Stargate starting its operations through 2030 and beyond. It remains unclear whether the allocated funds encompass the entirety of the project, including the data center infrastructure, internal machinery, and associated power expenses.

From a financial standpoint, Microsoft is predicted to afford the Stargate effort over the next six years. This could be possible if the software and cloud businesses together will continue to generate over USD 80 billion in net income against almost USD 230 billion in sales. If all will be on track, the company can collectively bring in around USD 1.3 trillion in revenues and have approximately USD 500 billion in net income. 

The rapid adoption of AI technology, particularly GenAI, has precipitated a surge in demand for AI data centers capable of undertaking more sophisticated tasks than conventional facilities. The proposed supercomputer in the United States would stand as the largest in a series of installations planned by the collaborating entities over the proposed timeline.

Following this substantial investment, a spokesperson for Microsoft underscored the company's track record in pioneering AI infrastructure, utilized for training and deploying leading AI models globally. They emphasized Microsoft's perpetual commitment to planning for future infrastructure innovations essential for advancing the frontier of AI capabilities.

Moreover, Microsoft is reportedly pursuing the development of a smaller, fourth-phase supercomputer for OpenAI, slated for introduction around 2026. Speculations also abound regarding OpenAI's venture into designing its own AI training and inference chips, with CEO Sam Altman seeking investors to back up his USD 7 trillion AI chip-building dream.

Over the years, Microsoft has also made significant investments in expanding its data center footprint across the United States.