OpenAI’s ambitious Project Stargate — a $500 billion AI infrastructure initiative — has become the latest flashpoint in the high-stakes rivalry between Sam Altman and Elon Musk. In May, there were reports that Tesla (TSLA) CEO and former presidential advisor Musk attempted to block OpenAI’s deal to build one of the world’s largest AI data centers in the United Arab Emirates unless his own company, xAI, was included. In a candid exchange on the OpenAI Podcast, Altman addressed reports that Musk tried to leverage political influence in Washington to derail the Stargate UAE project, expressing regret and disappointment over what he sees as a breach of fair competition.
“I had said, I think also externally, but at least internally after the election that I didn't think Elon was going to abuse his power in the government to unfairly compete. And I regret to say that I was wrong on that,” Altman said. “I don't like being wrong in general, but mostly, I just think it's really unfortunate for the country that he would do these things, and I didn't think — I genuinely didn't think he was going to. I'm grateful that the administration has really done the right thing and stuck up to that kind of behavior. But yeah, it sucks.”
The controversy centers on Stargate UAE, a landmark collaboration between OpenAI, Oracle, Nvidia, Cisco, SoftBank, and Emirati AI firm G42 to build a massive data center complex in Abu Dhabi. The project, which is expected to open in 2026, is part of the broader Stargate initiative, first announced at the White House in January 2025 with President Trump, Oracle’s (ORCL) Larry Ellison, and SoftBank’s Masayoshi Son. Stargate aims to invest up to $500 billion in artificial intelligence (AI) infrastructure by 2029, with the UAE facility serving as a global computing hub for cutting-edge AI research and deployment.
According to multiple reports, Musk — who leads xAI, a direct competitor to OpenAI — warned G42 and other stakeholders that the project would not receive U.S. government approval unless xAI was brought into the deal. This intervention reportedly occurred just as OpenAI and its partners were finalizing the agreement, and as President Trump was preparing to tout the investment during a Gulf tour. Musk’s efforts ultimately failed, and the Stargate UAE project moved forward without xAI’s involvement.
Musk has previously criticized Stargate’s financial underpinnings, claiming that the coalition lacked the capital to fulfill its promises — a charge that has been repeatedly denied by Altman and other project backers. Industry analysts note that Musk’s frustration may be fueled by xAI’s struggle to match OpenAI’s scale and global partnerships, despite raising $6 billion and securing some deals in the Gulf region. Altman, during the podcast, also pushed back on this, saying they did have the money, although it wasn’t just “sitting in a bank account.” Altman noted the funding would be spent over a few years, but wasn’t concerned about any funding challenges.
The Stargate saga highlights the intensifying competition — and personal animosity — at the top of the AI world. Altman’s comments reflect a broader concern that the race for AI dominance is spilling over into geopolitics and government lobbying, with major players seeking to influence regulatory and investment decisions at the highest levels. The Trump administration has signaled support for large-scale domestic AI infrastructure, but have so far resisted pressure to tilt the playing field in favor of any one company.
For OpenAI, Stargate represents a transformative bet on the future of AI, with plans for massive U.S. and international data centers, partnerships with technology giants, and a vision for AI-powered breakthroughs in fields from healthcare to defense. For Musk and xAI, the episode is a reminder of the fierce obstacles facing even the most well-funded challengers in a sector increasingly defined by scale, access to capital, and political influence.
On the date of publication, Caleb Naysmith did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
