Where does the 500 billion of Stargate come from? Masayoshi Son: Leverage!

After the United States announced the $500 billion AI project "Stargate," investors and creditors are highly focused on SoftBank's financing plan.

On Tuesday, Bloomberg reported that SoftBank is considering a complex, highly leveraged "project financing model" to support its ambitious "Stargate" artificial intelligence plan, which is expected to have a total investment of $500 billion or more.

According to informed sources, SoftBank is exploring a high-leverage, low-equity financing structure. SoftBank, OpenAI, and its partners Oracle and Abu Dhabi's MGX may contribute about 10% of the total cost in equity, with the remaining funds primarily raised through the debt market.

Sources further indicated that the financing model is mainly project-based and may include 10% common equity, 20% preferred equity, and mezzanine debt, with 70% senior debt; or 50% senior debt, 40% preferred equity and mezzanine debt, and 10% common equity.

This high-leverage structure is similar to financing models used for large infrastructure projects, such as pipelines, power plants, bridges, or telecommunications networks. However, SoftBank can take advantage of Japan's ultra-low interest rates, and this form is popular among retail bond investors, which may alleviate the burden.

From the current project scale and progress, the "Stargate" plan aims to build tens of gigawatts of data center capacity, potentially becoming the largest deployment of computing power in history. Currently, the project has begun construction on its first data center in Abilene, Texas, and is selecting other locations.

SoftBank founder Masayoshi Son stated that the plan is to immediately invest $100 billion. However, most of the funding sources have yet to be determined, and SoftBank is still seeking more stakeholders to participate. There are concerns that Masayoshi Son tends to bet on large deals. Additionally, SoftBank is expected to announce a net loss of approximately 155 billion yen ($1 billion) for the third fiscal quarter on Wednesday.

It is worth mentioning that the rise of DeepSeek's low-cost open-source AI models may lead to more intense competition and profit declines for technology providers. Meanwhile, OpenAI is facing a takeover bid led by Elon Musk, bringing uncertainty to the financing plan for "Stargate."