Neural Notes: What Trump’s Stargate AI plan could mean for Australia
Trump’s Stargate AI initiative has resulted in backlash, including from Elon Musk. But what is it and how could it affect Australian AI?
Welcome back to Neural Notes, a weekly column where I look at how AI is affecting Australia. This week: US President Donald Trump unveiled his US$500 billion ‘Stargate,’ AI initiative. It’s ruffled a lot of feathers and incited clapbacks from the likes of Elon Musk.
Here’s what it’s all about, Why Musk is mad, and the effect it could have on the Australian AI sector.
Trump’s Stargate involves some major tech collaborations
Trump announced Stargate on January 21, presumably as a response to the global AI arms race, particularly China’s growing influence in the space.
Stargate brings together some of the biggest names in tech. OpenAI, the company behind ChatGPT, will lead operations, while SoftBank will serve as the financial backer. Oracle, under Larry Ellison, is the key technology partner and has already started work on the first of several planned data centres in Texas.
The initiative is kicking off with US$100 billion but plans to scale up to US$500 billion over four years. Its focus includes constructing AI-focused data centres across the US, each covering around 500,000 square feet. Trump claims this will create over 100,000 jobs and ensure the future of technology remains in the US.
The Stargate project aligns with Trump’s broader strategy to maintain ‘US technological supremacy’, particularly against China.
The initiative complements Trump’s proposed tariffs on Chinese technology imports, which he claims will protect American tech industries and reduce dependence on foreign technology. However, these policies present a complex economic landscape.
While Stargate promises job creation and technological advancement, the tariffs could have mixed effects.
According to the Consumer Technology Association, the proposed tariffs could lead to a significant decline in US purchasing power, potentially affecting the very industries Stargate aims to bolster.
Musk’s scepticism
Elon Musk – a vocal supporter oTrump and the leader of the temporary Department of Government Efficiency (DOGE) – has expressed doubts about the project’s funding.
“They don’t actually have the money,” Musk wrote on X, claiming SoftBank has “well under $10B secured”.
This isn’t the first time Musk has been critical of ventures involving OpenAI, a company he co-founded but left in 2018.
Musk has previously argued that OpenAI has strayed from its original mission to develop AI for humanity’s benefit and has grown too close to Microsoft.
As a result, Musk launched his own AI company xAI in 2023.
Musk’s scepticism has also reignited his long-standing feud with OpenAI CEO Sam Altman. Altman dismissed Musk’s claims on X, calling them “wrong”.
The project has also raised questions about Trump’s decision to roll back Biden-era AI regulations and has sparked questions about how Stargate will be governed, with concerns over transparency and oversight.
Biden’s order mandated developers of AI systems, with potential risks to US national security, the economy, public health, or safety, must submit safety test results to the government before making the systems publicly available.
The order also instructed federal agencies to establish testing standards and address risks related to chemical, biological, radiological, nuclear, and cybersecurity concerns. This executive action was implemented amidst ongoing challenges in Congress, where US lawmakers have yet to pass legislation to regulate AI development.
What Trump’s Stargate plans could mean for Australia
The Stargate project could have significant implications for Australia’s AI ambitions, particularly when its plans consume a chunk of global AI hardware. The Stargate initiative may exacerbate the global chip shortage, delaying the rollout of local AI infrastructure.
To date, Australia’s approach to AI has focused heavily on safety and regulation, a strategy that ensures responsible development. This includes $39.9 allocated towards the safe and responsible adoption of AI in the 2024-25 federal budget.
However, there is an argument (similar to Trump’s in the US) that this may be hindering Australia’s ability to compete with global players, that are moving faster to capitalise on AI opportunities.
In late 2024, the federal government introduced proposed mandatory AI guardrails for high-risk applications, following voluntary safety standards released earlier in the year.
These measures include labelling and watermarking AI-generated content, human oversight requirements, and risk management protocols.
However, this was followed by the introduction of the National AI Capability Plan, which aims to harness AI to grow the economy, support local industries, and position Australia as a leader in the field.
This effort builds on existing initiatives, including $1 billion allocated to critical technologies under the National Reconstruction Fund and a network of government-supported AI Adopt Centres aimed at upskilling small and medium enterprises.
While these measures represent a strong foundation, with the plan set to be delivered at the end of 2025, concerns remain about whether this timeline is fast enough to match the rapid pace of global AI development.
On the other hand, Australia has unique advantages. With abundant land, significant solar and wind energy potential, and the ability to develop renewable energy infrastructure quickly, the country is well-positioned to attract energy-intensive AI operations—provided these opportunities are strategically harnessed.
Microsoft’s recent $5 billion investment in local cloud and AI infrastructure also shows promise, highlighting Australia’s potential in AI is being recognised by major global players.
Indeed, there have been notable investments and acquisitions in the local AI sector. In July 2024, Australian design giant Canva made headlines with its acquisition of Leonardo.ai for an undisclosed sum.
The startup itself had raised $47 million just months earlier.
2024 also saw a flurry of modest investments into AI startups in Australia, reflecting growing interest in the sector. Notable examples include SpatialGPT’s $5.1 million seed round in May and Brainfish’s $3.85 million raise.
However, the enthusiasm for AI investments didn’t always translate into large funding rounds. According to Cut Through Venture’s Q3 2024 report, while AI and Big Data remained the top sectors for investor excitement, actual funding in this area didn’t match the hype.
During that period, AI and Big Data sat in tenth place in terms of funding, securing just $13 million. Comparatively, fintech secured $209 million.
This discrepancy between investor excitement and actual capital deployment suggests a cautious approach to AI investments. While investors recognise the potential of AI, they appear to be selective in their funding decisions, particularly for larger rounds.
As the US ramps up its AI efforts with projects like Stargate, Australia’s cautious approach to AI regulation and standards — focusing on alignment with international jurisdictions like the EU — may prove to be a prudent long-term strategy to avoid hindering progress.
However, this accelerating global competition could spark stronger arguments for faster innovation domestically, as Australia seeks to strike the right balance between responsible development and keeping pace with global advancements in AI.
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