As discussed at today’s press conference, Stargate will immediately start deploying $100 billion into data center construction with a long-term objective of $500 billion.
Trump estimated the project will create 100,000 jobs in the United States.
In addition to Oracle, SoftBank and OpenAI, Trump mentioned that the leading AI semiconductor producer NVIDIA (NVDA) will be directly involved, along with Microsoft (MSFT) via its relationship with OpenAI.
Energy is a critical element of the project and among the reasons it required direct government involvement and coordination.
AI data centers consume enormous amounts of energy. The project calls for the creation of numerous power generation plants on-site.
Curing cancer
One of the more compelling elements of today’s presentation was the description of the potential impact on health care.
Ellison offered as an example the ability to use AI computing capability to identify cancer cells through fragments in the blood stream and then develop customized vaccines for patients.
While most infrastructure projects typically involve fixing up roads and bridges, this one, quite literally, aspires to cure cancer. The example was offered to illustrate for the public the vast positive impact that AI could have on society.
Masa excitedly spoke about taking AI from mere artificial general intelligence—when computers have the same intelligence level as humans—to artificial super intelligence—when computers “solve the problems mankind could never solve.”
We anticipate the project will positively affect investors as well—in a potentially significant way.
This includes several companies that have been recently profiled within the 76report as well as several additional companies held across the Model Portfolios.
Below we provide our initial analysis of the impact of this announcement on four stocks that we continue to recommend.
Oracle (ORCL)
Shares of ORCL were up more than 7% during trading hours today as news of the company’s involvement was leaked to the press.
Shares continued to rise in after hours trading, following the press conference, and as we write have advanced nearly 11% on the day.
We have written about ORCL multiple times in the 76report (here and here). Even with today’s upside, ORCL shares are still meaningfully below their highest levels of November and December 2024.
We originally recommended ORCL because of our conviction in its transition towards becoming a major player in cloud computing and AI by leveraging its dominance in databases.
ORCL has also differentiated itself as a market leader in the intersection of health care and AI, via its acquisition of Cerner.
While ORCL has been somewhat late to the cloud and AI versus competitors, today’s announcement cements the company’s position as a major player in the AI revolution.
With a relatively modest valuation versus AI peers, we see real potential for the market to reward ORCL with a higher multiple going forward.
We await further details of the venture, but ORCL’s leadership role could also materially lift its long-term growth prospects. ORCL is held within the American Resilience Model Portfolio.
Other stocks
Digital Realty Trust (DLR) is not only one of the largest data center owners in the world, it is headquartered in Austin, TX and has extensive strategic relationships with both ORCL and NVDA.
DLR was not directly mentioned in the press conference. But given the immense scale of the project, the Texas focus and ORCL’s involvement, we would anticipate the venture will create opportunities that leverage DLR’s expertise in data center construction and management.
Our most recent write-up on DLR can be found here. DLR is a position within our Income Builder Model Portfolio.
Eaton (ETN) has evolved into a critical supplier of electrical and other industrial equipment to data centers as well as the electric grid. ETN will inevitably benefit from a project of this scale.
Our most recent write-up on ETN can be found here. ETN is a position within our American Resilience Model Portfolio.
Vulcan Materials (VMC) is far from a technology stock, but the construction requirements of developing data centers and power generation facilities are extensive.
VMC has the leading footprint of construction aggregates quarries in Texas and across the U.S. sunbelt, where these projects are most likely to be located due to access to energy and environmental permitting.
It is important to understand that a commercial construction project of this magnitude is not limited to the data center facilities themselves. There will be significant construction demand associated with the expansion of the energy infrastructure and other needs.
Our most recent write-up on VMC can be found here. VMC is a position within our American Resilience Model Portfolio as well as the Inflation Protection Model Portfolio.
Industrial renaissance
In the press conference, Trump alluded to being involved in additional investment projects. He noted the potential for commitments related to $6 to $7 trillion of investment projects… by the end of this week!
To drive job creation and overall growth, Trump is clearly prioritizing brick and mortar investment in the United States, from high tech to energy to housing.
We expect many sectors of the stock market to benefit from the acceleration in investment demand that come out of the new administration’s policies as well as its proactive deal-making.
Stocks took a breather in December and early January as a result of upward pressure on interest rates, which has dominated headlines.
As further announcements like this one continue to materialize, we expect investors to become more enthusiastic about the opportunities presented by Trump’s aggressive growth-oriented policies.
