The White House’s splashy announcement about investing in artificial intelligence is a blow to Nvidia and many other portfolio stocks involved in the AI boom. OpenAI, Oracle, SoftBank and investment fund MGX form a new company, Stargate Project, to build AI infrastructure in the U.S. In a press release, OpenAI, the creator of ChatGPT, says it will receive $100 billion “immediately” The plan is to invest a total of $500 billion over the next four years. Oracle Chairman Larry Ellison attended Tuesday night with OpenAI’s Sam Altman, SoftBank CEO Masayoshi Son and President Donald Trump, as construction has already begun on the Stargate project’s first data center in Texas. He said that The event confirms previous reports dating back to early 2024 about OpenAI’s ambitions to expand its computing footprint at US Club Holdings, with Nvidia and Microsoft, which have maintained close relationships with OpenAI over the years, , one of OpenAI’s “key early technology partners.” Stargate Project, according to a press release. Oracle, Nvidia, and OpenAI intend to “work closely together to build and operate this computing system,” the release states. Additionally, “Azure usage will continue to grow as OpenAI continues to work with Microsoft to use this additional compute to train our leading models and deliver better products and services.” ” is also written. Investors are optimistic about this news. Nvidia stock rose 3.5% on Wednesday to nearly $146 per share. This added to a 2.3% gain in Tuesday trading, boosted by afternoon reports on subsequent AI infrastructure announcements. Microsoft added 3% to about $437 per share after quiet trading Tuesday. Other club companies that were not explicitly called out in the press release or during the White House event were also featured in the news. Shares of Eaton, an electrical equipment supplier with a large presence in data centers, rose 4%, building on Tuesday’s more than 3% rise. Strong performance from electronic connector maker Amphenol also boosted sentiment towards Eaton. Dover, another AI data center mover, initially rose to a lesser extent on Wednesday and then soared. Shares rose 1.7% in early trading. The big picture The generative AI gold rush continues as companies scramble to build out more computing infrastructure to meet the demand for nascent technology. Billions of dollars have already been invested since the launch of ChatGPT in late 2022 sparked an AI boom. The Stargate project shows there’s more on the way, an encouraging sign for investors in companies that benefit from aggressive spending. Nvidia, a leading manufacturer of AI chips, is the embodiment of the AI boom. UBS analysts also said in a note to clients that the Stargate project could extend Nvidia’s growth runway beyond next calendar year. But there’s a lot more inside these data centers than Nvidia’s graphics processing units (GPUs), and that’s where companies like Eaton and Dover come into play. Eaton is a leading electrical systems company for data centers, utilities, and other commercial and industrial markets. Dover’s liquid cooling technology for high-performance servers with Nvidia GPUs, a diversified industry sector, is a key growth area. One question mark surrounding the Stargate Project announcement is the evolving relationship between OpenAI and Microsoft, given that the creators of ChatGPT and Oracle are forging a closer relationship through this effort. Microsoft said in a press release that key parts of the OpenAI partnership will continue through 2030, including a revenue-sharing agreement and OpenAI’s application programming intervention (API) that will be exclusive to Microsoft’s Azure cloud computing platform. The big change is that Microsoft now has the right of first refusal on OpenAI’s new computing power. “To further support OpenAI, Microsoft has endorsed OpenAI’s ability to build additional capabilities primarily for model research and training,” the company said. Some on Wall Street see the adjustment as a positive for Microsoft. Analysts at Wells Fargo say the tech giant will now be able to “harness only the most profitable or most consistent computing” from OpenAI, and will be able to “harness only the most profitable or most consistent computing” from OpenAI, known as inference, than more users. He said he is prioritizing the everyday use of AI models. Intensive training process. Wells Fargo argued this would also help Microsoft “offload” some of its capital spending to other companies. Microsoft already plans to spend $80 billion on AI data centers in fiscal year 2025, which ends in June. “For us, I think the partnership with OpenAI is an important partnership. We like it. It’s working well. It’s created a lot of value for us, so we We’re going to continue to do that,” said Microsoft CEO Satya Nadella. CNBC conducted the interview Wednesday from the World Economic Forum in Davos, Switzerland. Conclusion If the promised spending from the Stargate project materializes, it should provide tailwinds to our basket of AI stocks over the medium to long term. In the short term, market reaction will create opportunities for Dover. “Dover is a great stock to own,” Jim said at Wednesday morning’s meeting, arguing that chief executive Richard Tobin could further restructure the business portfolio to focus on fast-growing areas. . As the stock price fell on Wednesday, Jim said he intended to buy the stock. NVIDIA has become a “battleground” name these days, Jim said. Still, the company’s leadership position in the AI race remains. We’re happy that Microsoft won the bid on Wednesday, but it’s too early to tell whether the stock has actually gained footing. Mr Jim said the recent poor performance of the stock was “troublesome”. “This company could miss the numbers” when it releases its results next Wednesday night, Jim said. “That doesn’t mean you have to abandon ship.” (Jim Cramer’s Charitable Trust is long NVDA, MSFT, ETN, DOV. See here for a complete list of stocks. ) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours 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 at the Roosevelt Room of the White House in Washington on January 21, 2025. Trump announced a joint venture to fund artificial intelligence infrastructure. .
Aaron Schwartz | Sipa | Bloomberg | Getty Images
The White House’s splashy announcements about investments in artificial intelligence Nvidia There are also a number of other portfolio stocks playing a role in the AI boom.