Tech Brew Ride Home - The AI Incentives Game

Episode Date: September 24, 2025

Stargate gets off the ground, or at least, announces it is. What if OpenAI leases the chips from Nvidia instead of buying them. I go a bit deep in this episode in terms of the incentives behind all these AI moves. And what happens if AI makes translation as ubiquitous as spell check? OpenAI Teams Up With Oracle and SoftBank to Build 5 New Stargate Data Centers (Wired) In OpenAI Megadeal, Nvidia Discusses a New Business Model: Chip Leasing (The Information) Nvidia’s $100bn bet on ‘gigantic AI factories’ to power ChatGPT (FT) Alibaba Shares Soar After Hiking AI Budget Past $50 Billion (Bloomberg) VCs to AI Startups: Please Take Our Money (Bloomberg) Disney+, Hulu, ESPN to Hike Prices Again in October (The Wrap) WhatsApp adds built-in text translations on iPhone and Android (The Verge) Learn more about your ad choices. Visit megaphone.fm/adchoices

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Google Fi Wireless is not subject to data traffic deprioritization during times of high network usage. Welcome to the TechBrew Ride Home for Wednesday, September 24th, 2025. I'm Brian McCullough today. Stargate gets off the ground, or at least announces it is. What if OpenAI leases the chips from Nvidia instead of buying them? I go a bit deep in this episode in terms of the incentives behind all these recent AI moves, and what happens if AI makes translation as ubiquitous as spell check? Here's what you missed today in the world of tech. OpenAI, Oracle, and SoftBank have announced five new data center locations in the U.S.S. part of the Stargate Initiative, boosting Stargate's planned capacity to nearly seven gigawatts. Quoting Wired. AI is different from the Internet in a lot of ways, but one of them is just how much infrastructure it takes. OpenAI CEO Sam Altman said during a press briefing in Abilene, Texas on Tuesday, he argued that the U.S. quote, cannot fall behind on this, and the innovative spirit of Texas provides a model for how to scale bigger, faster, cheaper, better. Three of the new sites in Shackleford County, Texas, Donia Anna County, New Mexico, and a yet-to-be-disclosed location in the Midwest are being developed in partnership with Oracle. The move follows an agreement. Oracle and OpenAI announced in July to develop up to 4.5 gigawatts of U.S. data center capacity on top of what the two companies are already building at the first Stargate facility in Abilene. OpenAI claims the new data centers, along with a planned 600-megawatt expansion of the Abilene site will create more than 25,000 on-site.

jobs, though the number of workers required to build data centers typically dwarfs the amount needed to maintain them afterwards. The two remaining sites are being helmed by OpenAI and SB Energy, a soft bank subsidiary that develops solar and battery projects. These are located in Lourdestown, Ohio, and Mylam County, Texas. Stargate is one of several major U.S. technology infrastructure projects that have been announced since President Donald Trump took office at the start of the year. Open AI said in January that the $500 billion $10-gagawatt commitment between the chat GPT maker SoftBank, Oracle, and MGX, would, quote, secure American leadership in AI and create hundreds of thousands of American jobs. OpenAI initially framed Stargate as a new company that

would be chaired by SoftBank CEO Masayoshi-San. Now, however, executives close to the project say it's an umbrella brand name used to refer to all of OpenAI's data center projects, except those developed in partnership with Microsoft. The flagship site in Abilene is primarily owned and operated by Oracle, with OpenAI acting as the primary tenant, according to executives close to the project, the buildout, which is being managed by the data center startup Caruso, is on track to be completed by mid-20206 sources close to the project, say. It is already running on Oracle Cloud infrastructure and supporting OpenAI training and inference workloads. Those sources add. Oracle is in the process of standing up eight data center halls

in Abilene, which will each support roughly 100 megawatts of power. One of those buildings is currently complete, and another one is close to being finalized. When it is done, the facility will house more than 400,000 GPUs and support more than 1.4 gigawatts of power sources close to the project, say. The initial Stargate announcement called for companies with land, equipment, and other relevant resources to get involved. After it was published, OpenAI executives say they were inundated with messages from firms that wanted to participate. One executive estimates that OpenAI has surveyed around 700 sites in the U.S. where data centers could potentially be built. For the five projects announced Tuesday, Open AI claims it reviewed more than 300 proposals

together with its partners from roughly 30 states. In a policy white paper released Tuesday, Open-A-I-framed AI infrastructure as a crucial tool the United States will need to beat China and become a manufacturing powerhouse. Today, Communist Party-led China is developing electricity resources at unmatched velocity while the U.S. falls behind, the document argues. China's immense electricity consumption underscores not only its industrial dominance, but its ability to rapidly deploy AI infrastructure, including new data centers, semi-conductor fabs, and manufacturing hubs, end quote. Again, to underline this, Oracle will pay for and oversee the construction of three of these new Stargate data centers, and Open AI will then purchase computing power from Oracle.

And so, on top of that news, news that Oracle is looking to borrow $15 billion through the U.S. sale of corporate bonds as it begins to fulfill those massive cloud infrastructure deals with Open AI and others. Meanwhile, sources say OpenAI and Nvidia are discussing structuring their new AI Data Center partnership so that OpenAI would lease Nvidia's AI chips instead of buying them. Quoting server chips from Nvidia could ease the financial burden on OpenAI, which is already burning billions of dollars in cash a year due to high computing costs. Open AI has estimated a leasing arrangement would lower the cost of the server chips 10 to 15 percent compared to buying them according to one of the people, though it isn't clear how that was calculated. And by renting

the hardware, OpenAI wouldn't need to raise tens of billions of dollars to purchase it outright. It also frees OpenAI from the risk the chips could become outdated sooner than expected. OpenAI already rents Nvidia chip servers from Microsoft and Oracle. It isn't clear how the cost of a leasing arrangement with Nvidia would compare to what OpenAI is already spending on server rentals. The leasing deal could be structured to minimize risks for Nvidia as well. Invidia could set up an entity that borrows money to buy the servers using the chips as collateral. OpenAI's lease payments could go toward paying back the loan. That type of deal is the only viable path to building enough data centers for AI, said Aaron Ginn, the CEO of Hydra, whose software helps data center

firms generate revenue from Nvidia chips. He isn't involved in the deal, end quote. Actually, there are plenty of uncertainties surrounding Nvidia's $100 billion investment in OpenAI as a big piece in the Financial Times notes. Again, it raises questions about a seeming circular arrangement here. NVIDIA finances OpenAI, which then spends heavily on NVIDIA hardware. Critics are flagging this structure, but analysts say, NVIDIA's surging cash flow can support it and, if fully realized, the buildout could yield hundreds of billions of dollars in revenue for them. Invidia's stock has risen about 10x since ChatGPT's late 2022 debut, and the partnership would further entrenched NVIDIA as indispensable AI infrastructure. Open AI, meanwhile, is hedging,

striking a custom chip-packed with Broadcom, yet remains capacity constrained despite claiming 700 million weekly chat GPT users. The plan, remember, targets at least 10 gigawatts of compute, which the IEA says would consume as much electricity annually as 10 million U.S. homes. Jensen Wong has estimated in the past that each gigawatt requires roughly $50 billion in hardware spanning inviore processors, networking, and servers from partners like Foxcon, H.P., Dell, and Supermicro. Open AI says this is separate from Stargate, which we just discussed. The wager intensifies the AI arms race, even as Bain is warning the sector may undershoot the revenues needed to support the projected $500 billion in annual AI CAPX they expect by 2030. In other words, there's still no

guarantee that the revenue will be there to pay for all of this. Still, Nvidia's Kuda software ecosystem akin to Microsoft and Apple's platform lock-in makes switching costly bolster invidia's bet that access to infrastructure, not ideas, will be the ultimate gate to AI progress. So, sure, look, all of this AI stuff might just be a big bubble. There's no guarantee yet that even if you build all this out, you can get enough revenue from AI actual, you know, usage to cover the costs. But what you have to keep in mind about all this is the incentives here for the big players, the folks making these decisions. Like, announce you're spending big on AI, your stock up if you announce nothing, if you sit on your hands, your stock will get killed because the market

will fear you're falling behind an AI. Here's just the latest example of that. Alibaba's Hong Kong listed shares hit a nearly four-year high after CEO Eddie Wu announced plans to increase AI spending beyond the $53 billion target already announced over three years. The market rewards him for saying, no, no, actually, we're going to spend even more on AI than we thought. Quoting Bloomberg. Chief Executive Officer Eddie Wu anticipates overall investment in artificial intelligence accelerating to some $4 trillion worldwide over the next five years and Alibaba needs to keep up. The company will soon add a plan laid out in February to spend more than

$380 billion, or $53 billion, developing AI models and infrastructure over three years, he said. His cloud division, which already operates services from the U.S. to Australia, intends to launch its first data centers in Brazil, France, and the Netherlands in the coming year. Wu made his projections while out outlining plans to roll out Quen models and full-stack AI technology reflecting Alibaba's growing ambitions to both develop services and the infrastructure such as chips that underpin the technology. It shares rose as much as 9.7% in Hong Kong, helping lift Chinese chipmakers' ACM research and NARA Technology Group. In the most recent quarter, Alibaba reported triple-digit growth in its AI-related products. Its cloud division also posted

better than expected 26% jump in sales, making it the group's fastest growing unit. The company's stock has more than doubled this year. Companies only gain confidence to invest more when the visibility of the returns improves, said Vesernling, managing director at Union Boncare Preve. So, when they say they are raising investments in AI, it indicates good demand from customers and good ROI, end quote. So either everybody is spending because they are seeing, tangible signs of AI-juicing business, or else it's just a prisoner's dilemma thing. You can't be seen to be falling behind. Maybe this isn't just another tech fad. Maybe this is a fundamental revolution in the entire economy, and the foundations of that are being laid now, like a new

industrial revolution. But also, remember what everybody learned from the last 25 years of the tech revolution. Basically, only five big players won. I mean, a lot of people won, but if you look at the overall market, five big players basically control, what, 80% of it? And those five players basically had insane margins, printed money, had insurmountable moats, and were thus able to spread into adjacent markets and business lines. So again, incentives. Fear is an incentive. And the fear here would be, if this plays out like the tech revolution of the last 25 years did, if you're not one of the five winners or even two or three winners, you'll be roadkill. Study. And play.

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private jet if you sign on the dotted line? Quote, raising venture capital money has been a breeze for Decagon AI, a two-year-old startup developing artificial intelligence tools for customer service. All four of Decacon's funding rounds, totaling more than $230 million, were preempted, meaning firms like Andresen Horowitz offered to invest before the company started fundraising. Now, just three months after a round that valued it at $1.5 billion, Decagon is fielding unsolicited offers at valuations as high as $5 billion, according to people familiar with the matter. For Decagon and a few dozen other top AI startups, the fundraising script has been flipped. Instead of pitching venture capitalists up and down Sand Hill Road, VCs are pitching them,

hovering with gifts and favors in hopes of leading their next round. Jesse Zhang, the 28-year-old co-founder and chief executive officer of Decagon, says, investors hoping to back him have offered him everything from tickets to Golden State Warriors games to an autographed poster of an MMA legend. One investor even folded origami cranes into a mosaic of Decagon's logo and hand-delivered it to the company's San Francisco office with a term sheet hidden inside. Decagon took the deal. Investors are emailing term sheets. They're giving verbal offers. They're inviting founders to sport games. They're inviting founders to race Ferraris, and they're inviting them on private jets, said Bennett Siegel, a co-founder of

of investment firm Asterix and an early investor in Decagon, what you tend to see is the best companies are getting preempted every round and the time between rounds is shrinking. The lavish VC overtures are part of a larger Silicon Valley frenzy for AI driven by startup's astonishing revenue growth and investors' belief that these companies can dethrone tech giants. U.S. startups have raised around $200 billion this year so far, according to Pitchbock data, but 41% of that went to just 10 companies, highlighting VCs, relentless focus on a small group of AI frontrunners like Open AI and Anthropic. Last year, the share of funding that went to the top 10 companies was less than 25%, end quote.

Purely from my consumer reports slash household budgeting file, quoting the rap, Disney Plus, Hulu, and ESPN's Select Plan will get more expensive starting in October with notifications rolling out to subscribers on Tuesday. The rap has learned. The changes are set to go into effect on October 21st for new subscribers, current subscribers will see the change on their first billing date on or after October 21st. The pricing changes will be as follows. Disney Plus with ads will increase by $2 to $1199 per month. Disney Plus Premium will increase by $3 to $1899 per month and $30 to $189 per year. Hulu with ads will increase by $2 to $1199 per month and by $20 to $119.99 per year.

ESPN Select will increase by $1 to $12.99 per month and $10 to $1 to $1. $129.99 per year. Actually, I'm not going to read the whole thing because basically everything you might have subscribed to over there is going up by a buck or three, though things like the big daddies, the Hulu with ads plus live TV, Disney Plus with ads, and ESPN Select with ads bundle will increase by $7 to $89.99 per month cable bundle prices, people. Finally, today, here's another way to look at this AI moment. There was a time when spell checkers were a G.E. whiz technology. And then spell checking got infused into everything where anyone at any point manipulates text, and now it's just table stakes for any application doing anything with text at all.

What if AI is sort of like that? Here's an example. Meta has started rolling out built-in message translation in WhatsApp with support for more than 19 languages on iOS and 6 on Android. AI is making instant translation table stakes for any app, even video, even IRL social interactions, quoting the verge. It can be activated by long pressing down on messages and tapping the translate option to choose the language you want the message to be translated from or two. Support for English, Spanish, Hindi, Portuguese, Russian, and Arabic will initially be available for Android users while iPhone users can translate messages into more than 19 languages at launch. Android users can also enable automatic translation for entire chat threads to apply the feature to all incoming messages.

It's no real-time translation in your ears in front of your eyes or on your screen, and other messaging apps have also offered similar features. Google used WhatsApp to demonstrate tap to translate on Android nearly a decade ago, but for WhatsApp's billions of users, it could make conversations easier as they move throughout the world. WhatsApp says it plans to expand translation support for additional languages in the future, end quote. I've said before that if somebody had rolled out a universal translator back in, say, 1986, they'd be on the cover of Time magazine. They'd win the friggin' Nobel Prize. Today, Universal Translation is just going to be everywhere. Talk to you tomorrow. Ambition comes in all shapes and sizes.

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