A splashy White House announcement on artificial intelligence investment is a shot in the arm to Nvidia and a host of other portfolio stocks involved in the AI boom. The news OpenAI, Oracle , Softbank and investment fund MGX established a new company — dubbed the Stargate Project — to build AI infrastructure in the U.S. In a press release, ChatGPT creator OpenAI said $100 billion will be deployed “immediately,” with plans calling for a total of $500 billion in investment over the next four years. Construction has already started on the Stargate Project’s first data centers in Texas, Oracle Chairman Larry Ellison said Tuesday evening — appearing alongside OpenAI’s Sam Altman, Softbank CEO Masayoshi Son and President Donald Trump . The event confirms earlier reporting — dating back to early 2024 — about OpenAI’s ambitions to expand its computing footprint in the U.S. Club holdings Nvidia and Microsoft , which have maintained a close relationship with OpenAI for years, are among the “key initial technology partners” for the Stargate Project, according to a press release . Oracle, Nvidia and OpenAI intend to “closely collaborate to build and operate this computing system,” the release stated. It also read: “OpenAI will continue to increase its consumption of Azure as OpenAI continues its work with Microsoft with this additional compute to train leading models and deliver great products and services.” Investors are upbeat on the news. Shares of Nvidia rose 3.5% on Wednesday to nearly $146 each. That’s on top of a 2.3% gain in Tuesday’s session fueled by afternoon reports of the then-forthcoming AI infrastructure announcement. Microsoft added 3% to roughly $437 a share after a muted session Tuesday. Other Club companies not explicitly called out in the press release or during the White House event were up on the news. Shares of Eaton , an electrical equipment supplier with a significant data center presence, rose 4%, building on a more than 3% gain Tuesday. Dover , another AI data center play but to a lesser extent, initially climbed Wednesday before turning modestly lower. The stock gained 1.7% in the prior session. Big picture The generative AI gold rush continues as companies scramble to build more computing infrastructure to meet the demands of the nascent technology. Billions upon billions of dollars have already been invested since the launch of ChatGPT in late 2022 sparked the AI boom. The Stargate Project indicates that there’s plenty more on the way, an encouraging sign for investors in companies that benefit from the aggressive spending. Nvidia, the leading maker of AI chips, is the embodiment of the AI boom. And, in a note to clients, analysts at UBS said the Stargate Project may extend Nvidia’s runway for growth beyond the next calendar year. But there’s so much more inside these data centers than just Nvidia’s graphics processing units, or GPUs, and that’s where the likes of Eaton and Dover come into the fold. Eaton is a big player in the electrical systems for data centers, utilities, and other commercial and industrial markets. A diversified industrial, Dover’s liquid cooling technology for the high-powered servers containing Nvidia GPUs is a key growth area. One question mark surrounding the Stargate Project announcement is the evolving ties between OpenAI and Microsoft, given that the ChatGPT creator and Oracle are forming a cozier relationship through this initiative. In a press release, Microsoft said crucial parts of its OpenAI partnership are still in place through 2030, such as revenue sharing agreements and OpenAI’s application programming interference, or API, being exclusive to Microsoft’s Azure cloud computing platform. The big change is that Microsoft now has a right of first refusal on new computing capacity for OpenAI. “To further support OpenAI, Microsoft has approved OpenAI’s ability to build additional capacity, primarily for research and training of models,” the company said. Some on Wall Street view this tweak as a positive for Microsoft. Analysts at Wells Fargo said the tech giant can now “take only the highest-margin or most-consistent compute” from OpenAI, with its preference being for the day-to-day use of AI models, known as inference, ahead of the more intensive training process. It also helps Microsoft “offload” some capital expenditures to other companies, Wells Fargo argued. Microsoft already intends to spend $80 billion on AI data centers in its fiscal 2025, which ends in June. “I think the partnership with OpenAI, to us, is a critical partnership. We love it. It’s working. It’s created a lot of value for us, and we plan to just continue forward with it,” Microsoft CEO Satya Nadella said in a CNBC interview Wednesday from the World Economic Forum in Davos, Switzerland. Bottom line The pledged spending from the Stargate Project, if it comes to pass, should provide tailwinds to our basket of AI stocks over the medium and long term. In the short run, the market reaction offers an opportunity in Dover. “Dover is a terrific stock to own,” Jim said during Wednesday’s Morning Meeting, arguing CEO Richard Tobin can still further reshape its business portfolio to focus on faster-growing areas. With shares turning lower Wednesday, Jim said he would buy the stock. Nvidia has become a “battleground” name of late, Jim said. Still, its leadership position in the AI race is unchanged. While we’re pleased to see Microsoft catch a bid Wednesday, it’s too early to say whether shares have actually found their footing. The stock’s recent underperformance has been “problematic,” Jim said. “This is a company that could miss its numbers” when it reports earnings next Wednesday evening, Jim said. “Now, that doesn’t mean we have to abandon ship.” (Jim Cramer’s Charitable Trust is long NVDA, MSFT, ETN and DOV. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. 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From left, President Donald Trump, Oracle Executive Chairman Larry Ellison, SoftBank CEO Masayoshi Son and OpenAI CEO Sam Altman appear in the Roosevelt Room of the White House in Washington on Jan. 21, 2025. Trump announced a joint venture to fund artificial intelligence infrastructure.
Aaron Schwartz | Sipa | Bloomberg | Getty Images
A splashy White House announcement on artificial intelligence investment is a shot in the arm to Nvidia and a host of other portfolio stocks involved in the AI boom.