SoftBank Group has halted talks about an acquisition of U.S. data center operator Switch, a setback to founder Masayoshi Son¡¯s ambition to roll out Stargate artificial intelligence infrastructure, according to people familiar with the matter.

For months, Son pursued a deal of around $50 billion for Switch, convinced that direct control of the latter¡¯s network of energy-efficient data centers would help the $500 billion Stargate push to generate computing power for partner OpenAI.

But earlier this month, Son conceded that a full acquisition was off the table and scrapped a planned January announcement, the people said, asking not to be named because the matter is private. The two sides remain in active discussions about a partial investment or a partnership, they said.

Earlier this month, SoftBank inked a $3 billion deal to buy New York-listed investment firm DigitalBridge Group, which holds a majority stake in Switch.

A SoftBank spokesperson did not respond to a request for comment. Representatives of Switch and DigitalBridge declined to comment.

The deal would have been one of the Japanese company¡¯s biggest to date, and would have given a much-needed boost to the Stargate Project to build U.S. data centers. Son had seen that project as a key path to play a bigger role in an AI race and had pledged to deploy $100 billion ¡°immediately¡± alongside OpenAI, Oracle and Abu Dhabi¡¯s MGX.

Some within the SoftBank camp had been wary about the size of the deal as well as the logistics of running data center campuses from Las Vegas to Atlanta, the people said. Switch is simultaneously preparing for an initial public offering as soon as this year, and the company¡¯s backers have considered a valuation of about $60 billion including debt via a stock-market listing. Any deal would also likely come under scrutiny from the Committee on Foreign Investment in the U.S.

While it¡¯s unlikely that SoftBank and Switch will revive talks about a full acquisition, the two sides may find a way in the future, given Son¡¯s keen interest in a deal. The billionaire has said he eyed Arm Holdings for years before he was able to acquire the U.K. chip designer in 2016. SoftBank also owns an Ohio manufacturing facility that is operated by Taiwan¡¯s Hon Hai Precision Industry, which might be a model for a partnership with Switch.

Despite being early to invest in AI technologies, Son and SoftBank have largely missed out on a global rush to build the semiconductors, server racks and other hardware to support machine learning, with the lion¡¯s share of money flowing to a small circle of chipmakers including Nvidia and Taiwan Semiconductor Manufacturing Co.

SoftBank has doubled down on its bets in...