SoftBank Group CEO Masayoshi Son delivered a rare and pointed critique of Elon Musk's artificial intelligence strategy this week, telling shareholders that the billionaire's plan to build data centers in orbit is a losing bet. Speaking at SoftBank's wireless division shareholder meeting, Son dismissed the feasibility of orbital computing in the near term, arguing that the economics of chip and hardware costs far outweigh any potential energy savings from space-based solar power.

Son, whose company recently surpassed Toyota as Japan's most valuable corporation, framed the dispute as a matter of timing and cost, not engineering capability. He acknowledged Musk as an 'extraordinary agent of change' but drew a firm line on priorities in the current AI race. The remark carries significant weight because both men are deploying tens of billions of dollars toward AI infrastructure, yet their strategies could not be more different.

Son's Cost Breakdown Challenges Space-Based Strategy

At the shareholder meeting, Son responded to a question about orbital computing with a detailed cost analysis. Musk and SpaceX have pitched orbital data centers as a way to harness cheap solar energy in space, thereby cutting the electricity bills that heavily weigh on terrestrial operations. However, Son countered that electricity accounts for only a small share of total operating expenses for data centers, compared with the far higher costs of semiconductors and hardware.

'In the battle for AI, the next few years will be far more important than what might happen a decade or so from now,' Son said, as reported by Bloomberg. He also cited the steep cost of launching equipment into orbit, the difficulty of maintaining hardware in space, and communication latency between ground and orbit as critical obstacles. According to Son, the urgency of the current AI race favors his approach, as terrestrial construction can deliver new capacity within months rather than years.

SoftBank's Ground-First AI Bet: Stargate, Arm, and Robotics

SoftBank has committed billions of dollars to on-the-ground AI infrastructure, most notably through the Stargate project, which was announced alongside OpenAI in January 2025. The initiative plans to invest $500 billion over four years in U.S.-based AI data centers and related infrastructure. SoftBank itself committed $19 billion to the project, according to reports.

In addition, Son has invested heavily in chips through SoftBank's dominant stake in Arm Holdings, the British chip designer whose blueprints power processors across the technology industry. Arm has become a cornerstone of SoftBank's AI strategy, as its chip architectures are widely used in AI accelerators and data center servers. At the parent company's annual shareholder meeting, Son set a target to grow the firm's net asset value to 1 quadrillion yen (approximately $6.4 trillion) over the next 16 years, driven by the pursuit of what he calls 'artificial superintelligence.' This ambitious vision is backed by acquisitions such as the $5.4 billion purchase of ABB Robotics and a $4 billion DigitalBridge deal, both aimed at strengthening SoftBank's AI ecosystem.

The Son-Musk Rivalry: A History of Disagreements

The orbital critique is only the latest flashpoint between two billionaires with a history of public disagreements stretching back nearly a decade. In 2017, Elon Musk and Son met to discuss a potential SoftBank investment in Tesla, but the talks collapsed over disagreements about ownership structure. After the Stargate announcement in January 2025, Musk publicly questioned its financial footing on X (formerly Twitter), claiming that SoftBank had secured well under $10 billion for the project. SoftBank has since backed its commitment with additional investments and acquisitions, underscoring Son's determination to lead the AI infrastructure race.

Son's strategy is rooted in the belief that the AI revolution will be won on the ground, where data centers can be built rapidly and scaled efficiently. He has described the next few years as a 'decisive moment' for AI development, and his actions reflect that sense of urgency. In contrast, Musk's approach leverages SpaceX's success in spaceflight to propose a longer-term, potentially transformational solution to the energy demands of AI.

SpaceX's Record IPO Fuels Orbital Ambitions

SpaceX went public on June 12 in the largest initial public offering in financial history, raising approximately $75 billion at a valuation of about $1.77 trillion, according to CNBC. The IPO provides substantial capital for Musk's orbital ambitions, including the development of orbital data centers. However, analysts have expressed skepticism about the viability of such projects. Morningstar analyst Nicolas Owens valued SpaceX at just $63 per share in a June report, well below the $135 offering price, estimating that investors were effectively paying a $72-per-share premium for the chance to profit from speculative future projects such as orbital data centers.

Morningstar assigned a 43% probability to a scenario in which orbital data centers never become commercially viable, and just 7% to its most optimistic outcome. This analysis highlights the considerable risk associated with Musk's vision, even as it attracts significant investor interest. For Son, the risk-reward calculus favors immediate, tangible investments in terrestrial infrastructure over speculative space-based projects.

Global Energy Demand Adds Urgency to the Data Center Debate

The broader context of the AI infrastructure race is a rapidly growing demand for energy. Global data centers consumed roughly 415 terawatt-hours of electricity in 2024, about 1.5% of global electricity consumption, according to the International Energy Agency. Gartner estimates that figure rose to about 448 terawatt-hours in 2025, and projections indicate that data center electricity consumption could more than double by 2030, reaching approximately 945 terawatt-hours annually, driven by the expansion of AI computing workloads.

This energy crisis gives both sides of the debate real urgency. Son argues that his approach can deliver new capacity quickly, meeting immediate needs while also driving down costs through innovations in chip design and data center efficiency. Musk, on the other hand, contends that only space-based solutions can provide truly abundant and cheap energy for AI in the long run. Son's mantra, 'He who strikes first wins,' as reported by the Japan Times, encapsulates his belief that being first to deploy at scale will determine the winner of the AI race.

The clash between Son and Musk represents a fundamental debate about the future of AI infrastructure: whether to double down on proven terrestrial technologies or invest in speculative space-based alternatives. Both men are deploying tens of billions of dollars toward their respective visions, and the outcome of their rivalry could shape the global AI landscape for decades to come. As data centers consume an ever-larger share of the world's electricity, the stakes have never been higher, and the strategies of these two tech titans will be closely watched by investors, policymakers, and the entire tech industry.

Source: AOL.com News