Microsoft Corp. (NASDAQ:MSFT) and OpenAI are reportedly working on a supercomputer project called "Stargate" that could cost up to $100 billion. The project is expected to be operational by 2028.

What Happened: Microsoft and OpenAI are in the process of planning a data center project that would include the launch of an artificial intelligence supercomputer, "Stargate," in 2028, reported The Information.

The project, which is expected to be financed by Microsoft, is projected to be 100 times more expensive than some of the largest existing data centers. It could require "several" hundred acres of land and require up to 5 gigawatts of power.

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Interestingly, Microsoft paid $76 million to acquire a 407-acre pumpkin farm in Wisconsin in December.

According to the report, the demand for AI data centers capable of handling more advanced tasks has surged due to the rapid adoption of generative artificial intelligence technology.

The proposed supercomputer, based in the U.S., would be the largest in a series of supercomputers the companies plan to construct over the next six years. The estimated cost of $100 billion was attributed to unnamed sources by The Information.

Microsoft and OpenAI are currently in the third phase of a five-phase plan, with a significant portion of the cost for the next two phases involving the acquisition of the necessary AI chips.

Why It Matters: The news of this ambitious project comes at a time when the race for AI dominance is heating up.

Just last week, it was reported that Apple Inc. (NASDAQ:AAPL) had not yet chosen between Alphabet Inc.'s Google and OpenAI for its AI integration. If OpenAI wins the race, it could further boost Microsoft's lead against Google.

Despite this, Microsoft is not resting – it acqui-hired Google DeepMind and Inflection AI co-founder Mustafa Suleyman and several employees of the AI startup to lead a new consumer-centric Microsoft AI division.

Ark Invest's Brett Winton thinks Microsoft is trying to diversify its exposure to OpenAI, but the new $100 billion Stargate project suggests Nadella is all-in on his AI vision with OpenAI CEO Sam Altman.

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