Prime Highlights:
SoftBank is set to invest $40 billion in OpenAI, at a $260 billion pre-money valuation, positioning SoftBank as the largest backer of the AI company, surpassing Microsoft.
The investment will be spread over 12 to 24 months, with the first payment expected in spring 2025.
Part of the funding will support Stargate, a collaboration between SoftBank, OpenAI, and Oracle, aimed at advancing U.S. AI infrastructure.
Key Background:
SoftBank is reportedly close to finalizing a significant investment deal with OpenAI, pledging $40 billion in primary funding at a pre-money valuation of $260 billion. This deal would position SoftBank as OpenAI’s largest backer surpassing previous funding from Microsoft, marking a major shift in the backing of the AI giant.
The funds will be disbursed over the next 12 to 24 months, with the initial installment expected to occur as early as this spring. Additionally, SoftBank may syndicate up to $10 billion of the total amount. This investment round will value OpenAI at $300 billion post-money, significantly higher than the $157 billion private valuation from October 2024. While early expectations pegged OpenAI’s valuation at $340 billion, sources later indicated it would be closer to $300 billion.
Part of the funding will be allocated to Stargate, a new joint venture involving SoftBank, OpenAI, and Oracle. Stargate, which was announced by former President Donald Trump in January, aims to invest billions into U.S. AI infrastructure, reflecting the growing strategic importance of artificial intelligence in national development. OpenAI’s ChatGPT, launched in late 2022, has spurred fierce competition in the generative AI market, which is projected to exceed $1 trillion in revenue within the next decade. OpenAI is now engaged in a highly competitive race against major players like Microsoft, Google, Amazon, Meta, and Elon Musk’s xAI.
In addition to this funding deal, SoftBank has committed to spending $3 billion annually on OpenAI’s technologies for its own subsidiaries, including chip designer Arm. Furthermore, SoftBank and OpenAI have entered into a joint venture, “SB OpenAI Japan,” aimed at bringing OpenAI’s enterprise solutions to the Japanese market. OpenAI continues to expand its influence, with the recent release of ChatGPT Gov, a secure platform tailored for U.S. government use, ensuring greater data protection for sensitive information. This move further strengthens OpenAI’s position in the evolving AI landscape.
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