Recent announcements have dispelled any doubts about the momentum in artificial intelligence (AI) infrastructure spending. Last week, President Donald Trump unveiled the Stargate AI project, which has backing from OpenAI, Oracle (NYSE: ORCL), and Japan’s Softbank. The consortium intends to invest $500 billion over the next four years to build data centers for managing the increasing demands of AI.

The plan includes the initial construction of ten data centers, expanding to twenty thereafter. According to Oracle Chairman Larry Ellison, construction is already underway, with the first center located in Abilene, Texas. Softbank is the leading financial supporter, committing $100 billion to kick off the project.

The partnership aims for Oracle, Nvidia (NASDAQ: NVDA), and OpenAI to work together on the computing systems while OpenAI oversees operational aspects.

With such significant investment on the horizon, let’s explore three companies likely to emerge as key beneficiaries from this initiative.

1. Nvidia

Nvidia is poised to be the major beneficiary of the Stargate project. The company will play a crucial role in the development of computing systems for the data centers, which will undoubtedly utilize a vast number of Nvidia’s graphic processing units (GPUs). With a commanding 90% share of the GPU market and a pivotal role in this venture, Nvidia is expected to be the primary supplier of GPUs for these facilities.

Historically, when Microsoft has discussed its capital expenditures for AI, approximately half has been allocated for long-term assets, such as land and buildings, while the other half has focused on GPU and CPU (central processing unit) servers. This segmentation suggests a significant portion of costs for this project will funnel directly into Nvidia’s GPUs.

Furthermore, Stargate could stimulate additional investment in AI data centers from other major tech firms. Microsoft, Nvidia’s top customer, has announced a plan to invest $80 billion in AI data centers, while Meta Platforms has revealed a commitment of $65 billion for AI infrastructure this year.

The competition in AI is intensifying, positioning Nvidia as a principal player. The stock maintains a reasonable valuation, with a forward price-to-earnings (P/E) ratio of roughly 32.5 based on 2025 projections, and a price/earnings-to-growth ratio (PEG) of 1. Generally, a PEG ratio under 1 suggests that a stock is undervalued, although growth stocks typically have PEG ratios above 1.

2. Oracle

Oracle, as a member of the Stargate consortium, aims to enhance its presence in the cloud computing sector, where it currently holds a modest 3% market share, ranking fifth. This puts it behind industry giants like Amazon (31%), Microsoft (20%), and Alphabet (12%), and just ahead of Alibaba from China (4%).

Despite this, Oracle has been witnessing impressive growth in the cloud domain. Last quarter, its cloud revenue experienced a 24% year-over-year increase, reaching $5.9 billion. Cloud infrastructure revenue surged by 52% to $2.4 billion, and cloud application revenue grew by 10% to $3.5 billion. Additionally, Oracle Cloud Infrastructure (OCI) revenues soared by 52%, and GPU usage exploded by 336%.

The company claims its OCI platform is both faster and cheaper than competing cloud services and is currently used for training critical generative AI models. Notable customers include OpenAI, xAI, Cohere, and Meta Platforms.

A unique advantage for Oracle is that its data centers are relatively new. The company has also established multi-cloud agreements with the major three cloud providers, enabling clients to efficiently use its services alongside other providers all in one environment.

While its cloud operations are thriving, Stargate presents a significant avenue for revenue growth. The construction of the first data center is underway, but it will take time to become operational. Market analysts from Morgan Stanley predict that the first data center could contribute around $10 billion in annual revenue by fiscal year 2027 (ending May 2027).

3. Taiwan Semiconductor Manufacturing (TSMC)

Although TSMC is not directly involved in the Stargate project, increased spending on data centers will create a heightened demand for advanced chips, making TSMC (NYSE: TSM) a significant benefactor. As the largest semiconductor contract manufacturer globally, TSMC is the main producer of Nvidia’s GPUs.

While competitors Intel and Samsung face challenges, TSMC is thriving. Its advancements in 3-nanometer and 5-nanometer technologies establish it as the leading force in high-performance computing, with revenue climbing by 37% in Q4.

TSMC’s market leadership has also granted it robust pricing power; reports suggest that the company has raised prices for its services this year, leading to an increase in gross margins, which improved by 600 basis points year-over-year to 59% in Q4.

With projected demand from Stargate, Microsoft, and Meta’s investments in AI infrastructure, TSMC can expect ongoing robust growth as it expands its manufacturing capabilities.

The stock also presents a compelling value, trading at a forward P/E ratio under 25 based on 2025 analyst predictions.

Randi Zuckerberg, former director of market development and spokesperson for Facebook, and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is also part of The Motley Fool’s board. Suzanne Frey, an executive at Alphabet, serves on The Motley Fool’s board. Geoffrey Seiler has investments in Alibaba Group and Alphabet. The Motley Fool holds positions in and recommends Alphabet, Amazon, Intel, Meta Platforms, Microsoft, Nvidia, Oracle, and Taiwan Semiconductor Manufacturing. The Motley Fool also recommends Alibaba Group and has provided the following options: long January 2026 $395 calls on Microsoft, short February 2025 $27 calls on Intel, and short January 2026 $405 calls on Microsoft. Please refer to The Motley Fool’s disclosure policy.

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