WSJ What’s News - U.S.’ $500 Billion AI Project Struggles to Launch

Episode Date: July 22, 2025

A.M. Edition for July 22. Six months in, Stargate has so far failed to complete a single deal for a data center despite the Trump administration’s ambitions. The WSJ’s Eliot Brown says OpenAI is instead finding other partners. Plus, Chinese and European leaders are set to meet in Beijing this week, as the global economy seems to shrug off tariff uncertainties. And why more college graduates are starting their careers in America’s secondary cities. Azhar Sukri hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to this year's championship game. This is the big one. With Amex Platinum, you have access to an annual dining credit to some of the hottest restaurants around town. Score! So you can raise the bar on game night. That's the powerful backing of Amex. Terms and conditions apply. Learn more at amex.ca. Why Amex? Failure to launch the US's $500 billion AI project Stargate is struggling to get off the ground.

Plus, Chinese and European leaders will meet as both sides try to navigate the US trade war, and why more college graduates are starting their careers in America's secondary cities. Let's just say that these cities aren't typically their first choice. You might have been able to be selective and say, I will only move here, but they don't have that luxury anymore. So in some cases, it really is not their second or third choice, but it's the only choice they have in the top market. It's Tuesday, July the 22nd.

I'm Azhar Sukri for The Wall Street Journal. Here is the AM edition of What's News, the top headlines and business stories moving your world today. On the day after President Trump's return to the White House, the heads of Softbank and OpenAI stood next to the President as a $500 billion effort was unveiled to supercharge America's artificial intelligence ambitions. But in the six months since the announcement of Stargate, we are exclusively reporting that the project is struggling to get off the ground, and has sharply scaled

back its near-term plans. General Finance reporter Elliot Brown joins me now with more. Elliot, you're reporting that Masayoshi-san and Sam Altman have been at odds over crucial terms of the partnership, including where to build data centers. What is holding things up? Yeah, the short version is it's rather hard to just start up an incredibly large data center operation. These things are really complicated. You need to find a site, you need to be able to actually construct a building, you need

to be able to source enormous amounts of power, and you need to be able to buy lots of chips. And two partners have struggled to even select sites they both agree on. So at this point, they're planning to build a small site by the end of the year, and that is a dramatically reduced goal. Meanwhile, OpenAI has been signing deals with other partners to open data centers. Tell us a little bit more about that. Yes, so that's what really turned us on to this story is OpenAI signed a absolutely colossal sized AI deal with Oracle for 4.5 gigawatts of capacity.

And for context, that is the equivalent amount of electricity created by two Hoover dams. It's enormous and we sort of noticed it didn't include Softbank. So basically OpenAI has found it easier to do deals with other partners who have data centers at the ready while it works through things with Softbank. Yeah, energy definitely seems to be the determining factor when it comes to AI. And a lot of this seems to be fueled by the sheer cost of AI, as you say. Now, another journal story today outlines how smaller companies are increasingly looking to

be acquired by bigger rivals to help field those costs. Tell us a little bit more about that. Yeah, I mean, generally, the cost of the is really extraordinary for something that's you know at its heart just software and in general the field is largely startups and largely incredibly large loss making startup so open for context lost billions of dollars last year and is planning to lose increasing billions as the years go on. And if you sort of look at the sector overall, you're going to have lots of startups dealing with how to fund these enormous losses. OpenAI raised $30 billion earlier this year.

You don't do that if you're a profitable company. You do that if you're losing money and you're going to spend it. Finding more chunks of 30 billion dollars out there for all these other startups is not really that possible for everyone. So, folks are going to have to make do and sell themselves. That's Journal Finance reporter Elliot Brown. Thank you so much, Elliot. Thank you. China has confirmed it will hold a top-level summit with the European Union in Beijing this week. Beijing says European Commission President Ursula von der Leyen and European

Council President Antonio Costa will meet Chinese President Xi Jinping on Thursday. This as two of the world's largest economies look to navigate US trade policies. And with all of those tariff uncertainties, you'd think the global economy would be showing signs of buckling. Yesterday, we told you how US growth is holding up, and now data is showing that resilience also extends globally. Tom Fairless is our global economics correspondent, and he says businesses and households have surprised economists with their ability to hedge. Global growth is solid, around two and a half percent, around its sort of trend rate, investment,

spending, global trade, all pretty positive. I suppose at the heart of it all is the US consumer that you'd expect would be the place you'd look for weakness given that they're facing extra taxes essentially on imports. You don't see a huge amount of signs of weakness. I mean, the households continue to spend because President Trump seems quite willing to chop and change with his deals and with rates. You'd expect some kind of softness in the months ahead. But then again, you know,

the US consumer until now has been very resilient. So it could be that they just power through. Coming up, we'll look at why college graduates are starting their careers in America's secondary cities, plus a roundup of the day's top business stories. All that and more after the break. business stories, all that and more after the break. College graduates desperate to secure that all-important first job are turning away from America's biggest cities amid an increasingly competitive labour market. Instead, affordability, wages and hiring activity are pushing young grads to consider alternative cities like Birmingham or Milwaukee, over say Atlanta or Chicago. Journal workplace reporter Ray Smith spoke to our Kate Bullivant about the state of entry level jobs in the U.S. It really is one of the toughest job markets for new grads to crack into

in recent years. Though the national unemployment rate is around 4%, for new college graduates it's actually 7.3%, much higher. Many of them are running into a bottleneck of entry-level openings as employers slow hiring, and there are fewer older workers who are switching jobs. And then you add to that, more companies are relying on artificial intelligence to do some of the work that new graduates would often do. So given these struggles, you report that they're looking at second tier cities. Tell us about these cities, where they are and why they're performing so well for graduates.

Yes, according to some new findings we have from ADP research, they're looking for cities beyond America's biggest metro areas. And in the top five, they're Raleigh, North Carolina, Milwaukee, Wisconsin, Baltimore, Austin, Texas, and Birmingham, Alabama. Besides the strong hiring, decent salaries, and affordability, for instance, Raleigh, Baltimore, and Austin, they all scored high because they have a higher than usual concentration of technology, health, and financial firms. Then, Birmingham and Milwaukee, they basically, for instance, Birmingham is home to big research

and healthcare institutions. So that's another thing that works in their favor because those companies are doing a lot of hiring themselves. And in Milwaukee, for instance, they've had a lot of expansion from companies that have operations there, including Eli Lilly. And are these young graduates actively seeking out these second tier cities? Or is it that they've just ended up there because they've had no luck with some of the larger cities? Yeah, let's just say that these cities aren't typically their first choice.

It's a matter of what we talked about earlier with the tough job market. And it's really, you know, you might have been able to be selective and say, I will only live here or I will only move here, but they don't have that luxury anymore. These graduates, they really, some of them have been applying for hundreds and hundreds of jobs and they start out maybe looking at a couple of cities but then they expand nationally to whoever will offer them something. So in some cases it really is not their second or third choice but it's the only choice they have in a tough market. And do these cities benefit from having graduates? I mean are they welcoming this increase? Yes cities do benefit from

having younger graduates, younger professionals come to their city because basically for two reasons. One is that you're looking at future growth. You want people to settle there, maybe start families, start their lives there. And so cities really look forward to having a future generation of people who are going to populate their cities and also raise families there and spend money there. But also the more that you have money there. But also the more that you have a vibrant young city, the more it becomes attractive where companies and restaurants

and hotel chains want to suddenly invest in that area because they see it as thriving, they see it as youthful, they see it as somewhere that's going to be sort of hot and hopping. And so it really does have this ripple effect, not just on more people wanting to move there after seeing that this is an interesting place to be, but it also can lead to more companies and more hospitality companies investing into that city because they see that more young people are headed there. That was our workplace reporter, Ray Smith. Ray, great talking to you. Thank you. Universal Music Group, the record label behind

artists such as Taylor Swift and Lady Gaga, has filed for a public offering in the US. The music conglomerate said it won't receive proceeds from the sale of ordinary shares, and it did not offer any details on the number of shares and price range for the offering. AstraZeneca plans to invest $50 billion in the US by 2030, including building a new facility in Virginia, the company's largest single manufacturing investment in the world. The announcement comes as drug makers commit to American manufacturing in a bid to avoid looming tariffs that threaten to raise costs across the industry. And today is another busy earnings day with the likes of Coca-Cola, Lockheed Martin and

General Motors out this morning, with Texas Instruments reporting later in the day. And that's it for what's news for this Tuesday morning. Today's show was produced by Daniel Bach and Kate Bullivant. Our supervising producer was Sandra Kilhoff and I'm Azhar Sukri for The Wall Street Journal. We'll be back tonight with a new show. Until then, thanks for listening.