TheChek News Flow

Over the past year, the running joke in the data center industry—even inside OpenAI—has been that the $500 billion Stargate initiative was less of a master plan than a “vibe.”

My reporting this weekend showed how little Stargate resembles the $500 billion effort touted at a White House event just over a year ago. Stargate now has no staff, nor does it have any obvious role in data center development. It has ended up as a flexible umbrella for OpenAI’s compute partnerships. Longtime readers may remember that in March 2024, we reported that “Stargate” then referred to OpenAI’s plan to build a $100 billion supercomputer with Microsoft.

This all reflects a deeper tension between AI labs’ ambitions and the costly realities of building and funding infrastructure. OpenAI’s evolution might offer lessons for its rivals, such as Anthropic, as they chase their own multigigawatt build-outs.

When Stargate was announced, its three partners, OpenAI, Oracle and SoftBank, threw out a big number: $500 billion of investment for 10 gigawatts of computing capacity. But the companies didn’t yet know how the build-out was going to be funded. As the plan evolved, OpenAI leaned more heavily on Oracle, whose investment-grade balance sheet allowed its projects to borrow money at better terms than the AI lab could have managed on its own.

While the public proclamation about Stargate generated excitement and momentum, eventually the project had to figure out how it could finance that vision.

Anthropic, which has privately discussed its ambitions to secure roughly 10 GW of capacity over the next several years, is likely running similar calculations. It is sharing its goals with partners and potential investors to test their willingness to fund those efforts.

We expect Anthropic is trying to line up an Oracle-like financial partner to help it secure favorable borrowing terms. (Unlike OpenAI, Anthropic didn’t declare its vision at a White House event, so it can work out these details behind the scenes.)

Stargate’s biggest contribution to the AI build-out might be the unusual deal OpenAI has struck with Oracle to share some of the economic risk of their 4.5 GW data center development. That essentially means OpenAI will pay more if projects are delayed or exceed the original budget—and if they turn out to be less expensive, OpenAI benefits from that too. (Given what we know about the cost of building AI, as well as how common delays are becoming, it’s likely OpenAI’s compute is only getting more expensive over time.)

Such a deal structure is not typical. Cloud providers’ customers are rarely on the hook for volatility in data center construction prices, but this deal is unprecedented in scale. It’s not clear how OpenAI could afford to share the burden of these costs or how much they could potentially rise.

The structure is likely a relief for Oracle investors, who have been closely watching how its fast-growing cloud business is affecting its margins—as we have reported here and here.

Anthropic will likely be watching that relationship closely. It faces a similar choice about how it will spread out risk as it inks more compute deals in coming years.

OpenAI’s experience suggests Anthropic should proceed cautiously when it comes to outright ownership of projects. Given all of the starts and stops in OpenAI’s plan to build its own data centers, Anthropic may want to kick those thoughts down the road a few years from now.

We’ve reported that Anthropic is looking to increase its long-term direct leases of data center capacity (rather than just renting chips from cloud providers) in coming years to gain more control over its compute footprint. Direct leasing offers a sort of middle ground, as it can provide a business more influence over location and capacity without requiring in-house data center development capabilities.

Owning infrastructure may eventually make financial sense for AI labs, but in the race to secure compute quickly, it might not be the best first option.

Elon Musk’s xAI is facing stiff opposition to its strategy of powering its data centers in Mississippi and Tennessee with dozens of small turbines burning natural gas. A public environmental hearing in Southaven, Miss., last week to consider a state air permit drew hundreds of opponents who urged the Mississippi Department of Environmental Quality to deny the request.

The dispute could serve as an early test of whether big tech can sidestep traditional utilities by rapidly assembling off-grid power plants from clusters of so-called temporary turbines.

US evacuates staff from Lebanon embassy as fears rise of war with Iran

President Trump has threatened to strike the Islamic republic unless a deal is reached on curbing its nuclear programme

Washington ordered the departure of non-essential diplomats and their family members from Lebanon on Monday as concerns mount of a potential US military conflict with Iran.

A senior state department official said an assessment of the regional security environment determined it was now “prudent” to reduce the embassy’s footprint in the country.

The move was only a “temporary measure’’ intended to ensure the safety of personnel, the official said. They added the embassy would continue to operate with core staff.

Dozens of staff were reportedly evacuated via Beirut airport on Monday, according to local media.

The evacuations come amid heightened tensions in the region. Washington has built up one of its largest military forces in the Middle East since the 2003 Iraq war, raising the prospect of a weeks-long military campaign against Iran.

President Donald Trump has threatened to strike Iran unless the regime swiftly meets his demands for a deal aimed at curbing Tehran’s nuclear programme.

On Thursday, he said the Islamic republic had a “maximum” of 15 days to reach a deal or “bad things will happen”. He also said he was considering limited strikes designed to press Tehran into making a deal.

The US build-up has continued as Iran’s foreign minister Abbas Araghchi told CBS on Sunday that Tehran was still working on a proposal for Washington to consider. Araghchi said Iran would “probably” submit the proposal during potential talks with special envoy Steve Witkoff in Switzerland this week.

US Secretary of State Marco Rubio is expected to travel to Israel later this week. A state department official said the plans were still in place “but remain subject to change”.

Lebanon is home to the Shia militant group Hizbollah, long one of Iran’s most potent forces in its regional network of allied proxies.

In the 1980s, US assets in Lebanon were repeatedly targeted during the country’s brutal civil war.

The US marine headquarters and the embassy in Beirut were both bombed in 1983 in attacks that killed 241 servicemen and 49 embassy staff — casting a long shadow over US diplomacy in the region.

Hizbollah has been subject to near-daily air strikes by Israel, despite a US-brokered ceasefire in 2024 intended to end more than a year of cross-border fire that culminated in a full-blown war at the end of that year.

The war severely weakened the group, but Israel continues to accuse Hizbollah of trying to rebuild its capabilities and says efforts by Lebanon’s government to disarm Hizbollah have been inadequate.

Israel has intensified its aerial campaign in recent weeks, an indication of its increasing concerns that the militant group could join Tehran in a new conflict against Israel should a US attack on Iran spiral into a regional conflagration which could draw in the proxy forces. Hizbollah did not participate in the 12-day war between Israel and Iran last June.

On Sunday, Israel said it hit Hizbollah “command centres” in Lebanon’s eastern Bekaa Valley linked to the group’s missile force, which it said had been working recently to improve its ability to launch rockets at Israel.

The strikes killed 10 people and wounded dozens more, according to Lebanese authorities who did not distinguish between militants and civilians. Hizbollah confirmed that at least eight of its members had been killed, including a senior field commander.

Decision follows Supreme Court ruling which ejected ports’ operator, Hong Kong’s CK Hutchison

Danish shipping giant Maersk and Swiss-based MSC are to take over the operations of two key ports on the Panama Canal after their Hong Kong-based operator was ejected last month, the Panamanian government said on Monday.

Panama’s Supreme Court last month annulled a contract with conglomerate CK Hutchison Holdings as operator of the Balboa and Cristóbal ports on the famous waterway after legal challenges.

The case stemmed from lawsuits dating back to 2021 and a government audit in 2025 alleging irregularities.

On Monday, the Panamanian government formally assumed control of the port facilities, including cranes, vehicles, computer systems and software, under a decree intended to guarantee their smooth operation until a new concession is awarded within 18 months.

Under the plan, two shipping groups will temporarily operate the ports. A unit of AP Møller-Maersk will oversee the Balboa port on the Pacific side of the canal while the port wing of MSC will run the Cristóbal port on the Atlantic side.

Maersk and MSC did not immediately respond to requests for comment. CK Hutchison’s Panama Ports Company unit said it had no immediate comment.

MSC was part of a consortium, also including BlackRock, that struck a deal last year to take a 90 per cent stake in the unit that runs the two ports.

The $23bn deal won praise from US President Donald Trump, who hailed it as a sign his administration was “reclaiming” the canal. But Beijing later insisted that China’s state-owned shipping giant Cosco should have a majority stake, prompting the buyers to reconsider.

Alberto Alemán Zubieta, a former administrator of the canal who has been appointed to lead a technical team to oversee the transition period, said the arrangement did not imply an expropriation of the machinery and equipment at the two ports.

“This is what is known as an occupation to guarantee that the ports can continue operating. We recognise that the equipment belongs to [a unit of Hutchinson],” he added.

Hutchison has taken Panama to arbitration following the Supreme Court ruling and Beijing has warned that the Central American country will pay a “heavy price” for the decision.

Beijing has invested substantial sums in Panama since the country switched diplomatic recognition from Taiwan in 2017.

Labour minister Jackeline Muñoz said there would be “no lay-offs”.

The allegations mirror those of OpenAI, which told House lawmakers that DeepSeek used ‘distillation’ to improve models

U.S. artificial-intelligence startup Anthropic said three Chinese AI companies set up more than 24,000 fraudulent accounts with its Claude AI model to help their own systems catch up.

The three companies—DeepSeek, Moonshot AI and MiniMax—prompted Claude more than 16 million times, siphoning information from Anthropic’s system to train and improve their own products, Anthropic said in a blog post Monday.

Earlier this month, an Anthropic rival, OpenAI, sent a memo to House lawmakers accusing DeepSeek of using the same tactic, called distillation, to mimic OpenAI’s products.

Anthropic said distillation had legitimate uses—companies use it to build smaller versions of their own products, for example—but it could also be used to build competitive products “in a fraction of the time, and at a fraction of the cost.”

The scale of the different companies’ distillation activity varied. DeepSeek engaged in 150,000 interactions with Claude, whereas Moonshot and MiniMax had more than 3.4 million and 13 million, respectively, Anthropic said.

Representatives from DeepSeek, Moonshot and MiniMax didn’t respond to requests for comment.

Many Chinese companies including Moonshot and MiniMax have recently released their latest AI models, many of which feature enhanced reasoning and coding capabilities. DeepSeek is preparing to roll out its next-generation model soon.

When DeepSeek first captured the attention of AI enthusiasts last year, it raised concerns that China might be able to quickly catch up with U.S. AI companies even without having access to the most powerful AI chips. AI observers speculated that DeepSeek might have used distillation.

In a research paper updated in September, DeepSeek said that during a late stage of pretraining its flagship V3 model, it exclusively used plain webpages and ebooks, without incorporating any synthetic data. However, it said some webpages contained “a significant number of OpenAI-model-generated answers.” DeepSeek said its base model might have acquired knowledge from other powerful models indirectly by drawing on such webpages.

Synthetic data, often using distillation, has been increasingly adopted for training large foundation models as developers face a shortage of high-quality data and focus on giving models so-called agentic capabilities, meaning allowing them to take action proactively to complete tasks on behalf of users. In a technical report in July, Moonshot said it used synthetic data for training its Kimi K2 model.

Anthropic said the activity by the Chinese developers raised national-security concerns for the U.S. “Foreign labs that distill American models can then feed these unprotected capabilities into military, intelligence, and surveillance systems,” the company said.

Fears around the strength of their underlying holdings increase

European private-equity firms sold off steeply Monday as fears around the strength of their underlying holdings intensified.

Shares in Stockholm-based EQT Group slid 8.85% to close at 269.70 Swedish kronor after a day of choppy trading. In Switzerland, Partners Group fell 8.4% to 850 Swiss francs, with the stock trading at its lowest level since July 2023. Asset managers CVC Capital Partners and ICG also fell Monday, dropping 7.1% in Amsterdam and 4.95% in London to the close, respectively.

The sector has fallen steeply so far in 2026, with shares in EQT now down 26% for the year. A selloff in software stocks spurred by fears over competition from artificial intelligence-powered agents raised concern around the quality of asset managers’ portfolios.

“The underlying holdings get hit, and as a result EQT, Partners Group and others all get hit, too,” Panmure Liberum strategist Joachim Klement said.

Knocks to software companies are particularly relevant to private credit fund managers given “software’s longstanding role in both public and private credit markets,” BlackRock credit strategist Dominique Bly wrote in a note to clients.

Selling accelerated last week when alternative asset management behemoth Blue Owl Capital said it would liquidate $1.4 billion in assets to pay out unhappy investors. The move shook confidence in the sector, as traders questioned whether investors in asset managers’ funds are willing to ride out a difficult spell.

Moreover, private asset funds aren’t helped by renewed uncertainty surrounding President Trump’s tariff regime following the U.S. Supreme Court’s decision to strike down levies issued under emergency powers, Allianz analysts wrote in a note.

“For private equity and private credit, trade policy uncertainty introduces material risk at a critical juncture for distribution recovery and credit pricing,” they said.

Not everyone is worried, however. Fear around the health of private credit portfolios “stems from a lack of understanding of what private credit is,” analysts at Bank of America wrote.

In a statement last week, Partners Group sought to address investor concerns around the quality of its holdings. While acknowledging investor concerns around “a potential bubble in the technology sector,” the group said its exposure to software is half that of the industry average.

Multi-dose pen will deliver four weekly injections from a single device

Eli Lilly LLY 5.15%increase; green up pointing triangle received approval from the Food and Drug Administration for a label expansion of its weight-loss drug Zepbound, adding a new monthly delivery option for patients.

The pharmaceutical company said Monday that the expansion allows Zepbound to be offered in a multi-dose pen that delivers four weekly injections from a single device. The obesity treatment had previously been available in single-dose vials.

Eli Lilly said the drug will be available at the same self-pay price in either the multi-dose pen or single-dose vial format, starting at $299 a month for the 2.5-milligram starter dose through LillyDirect, the company’s direct-to-consumer platform.

Zepbound is approved for chronic weight management in adults with obesity, or adults who are overweight with at least one weight-related condition. The drug is also approved to help treat moderate-to-severe obstructive sleep apnea in adults with obesity.

Lilly said demand for Zepbound reflects its efficacy, citing clinical trial data showing patients taking the 15-milligram dose lost an average of 20.9% of body weight over 72 weeks, compared with 3.1% for patients receiving placebo.

US fund manager has become a warning of what happens when exotic products do not go to plan

There are asset managers working in droves to cultivate the image of private credit as an attractive product for retail investors. Then there is Blue Owl. Last week, the US fund manager became a warning of what happens when exotic products do not go to plan, that will — and should — make everyday investors think twice before diving in.

The group, which manages more than $307bn of other people’s money, has permanently restricted redemptions at its Blue Owl Capital Corp II (OBDC II) fund. Previously, investors had been able to pull out cash equivalent to 5 per cent of the fund every three months. Instead, Blue Owl will sell assets in the fund piecemeal and return cash quarter by quarter, handed out to everyone according to their share whether they want it or not.

The saga highlights the two big risks that face investors in private credit: valuation and liquidity. The first involves trusting managers over what assets in funds are worth, since there is no live market price. The second entails limits on how much of their money investors withdraw from the fund, and when. Illiquidity is a feature, not a bug: it allows private capital managers to park money, for extended periods of time, in deals not available on public markets.

Blue Owl’s problem was originally linked to valuation. Investors worried its loans were not worth what it said, partly because a big chunk of OBDC II’s lending is to software companies. A listed fund with near-identical assets, called OBDC, was trading at a big discount to its net asset value — as, in practice, most “business development companies” of this kind do.

The valuation problem turned into a liquidity one: in an effort to stop outflows of OBDC II, the group tried to merge it with its listed counterparty, forcing investors to take a de facto haircut in exchange for the ability to sell stock on the market. Some kind of “liquidity event” — a sale, merger or listing — had always been the plan for OBDC II and is a common feature of older business development companies. But the terms of the deal raised hackles: Blue Owl was forced to scrap its plan.

With valuation and liquidity concerns feeding off each other, Blue Owl is now trying to tackle both at once. It has sold a strip of loans to other asset managers at close to face value, hoping to reassure the market that its loans are worth what it says they are.

Yet the transaction, which includes Blue Owl’s own insurer as one of the four buyers, has not totally quelled fears. Activist investor Saba Capital Management is now offering to buy fund stakes from customers at an embarrassingly steep discount.

The latest gaffe triggered a minor sell-off in asset managers’ stocks, which presumably reflects that retail investors are spooked. Blue Owl and peers such as Apollo and Blackstone are keen to broaden out, targeting the modestly rich as well as the super-rich. The hope is that, if regulation changes, holders of US 401(k) pensions could partake too.

The value of that future fee opportunity is now falling, as reflected by the 15 per cent slump in Blue Owl’s stock over the past week. The company is now skirting close to the $10 a share at which it went public in 2021, having halved from its peak a year ago. Private credit is certainly making some people richer; Blue Owl’s own shareholders are not among them.