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SoftBank in Talks to Invest up to $25 Billion in OpenAI

SoftBank in Talks to Invest up to $25 Billion in OpenAI

SoftBank is reportedly exploring a massive investment of up to $25 billion in OpenAI, according to the Financial Times. This potential partnership could see the Japanese conglomerate committing over $40 billion to AI initiatives alongside the Microsoft-backed startup.

If finalized, this deal would make SoftBank the largest single investor in OpenAI, surpassing Microsoft, which first backed the creators of ChatGPT in 2019. The discussions come shortly after both companies announced plans to jointly invest $100 billion in Stargate, a U.S. data center project for OpenAI, which could scale to $500 billion over the next four years.

Breaking Down the Potential Investment

The report highlights that SoftBank intends to directly invest $15 billion to $25 billion into OpenAI, in addition to its $15 billion commitment to Stargate. OpenAI is expected to contribute approximately $15 billion to Stargate, with SoftBank’s equity potentially covering OpenAI’s infrastructure costs.

This move would also allow OpenAI to reduce its reliance on Microsoft for cloud computing resources. Microsoft recently agreed to relinquish its position as OpenAI’s exclusive cloud provider, signaling a shift in their partnership dynamics.

Competition Heats Up in AI

The talks come amidst growing competition in the AI space. Chinese firm DeepSeek recently shook public markets with the release of its R1 “reasoning” model, developed on a relatively modest budget. This innovation caused a stir, with Nvidia losing up to $589 billion in market value in a single day before slightly recovering. Investors are now questioning whether expensive AI hardware is necessary when similar results can be achieved with fewer resources.

Adding to the tension, OpenAI claims that DeepSeek used its proprietary models to train R1 and other systems through a method called “distillation.” This approach enables developers to replicate performance with smaller, more cost-effective models. OpenAI alleges this violates their terms of service, which prohibit the use of their outputs to develop competing models.

SoftBank’s Largest Bet Since WeWork

If the deal moves forward, it would mark SoftBank founder Masayoshi Son’s biggest investment since the $16 billion infusion into WeWork. The partnership could help OpenAI expand its infrastructure funding and move closer to its ambitious goals.

Around 20% of Stargate’s funding is expected to come from equity, with the rest secured through debt tied to assets and cash flow. OpenAI, which was valued at $157 billion last year, is also reportedly considering transitioning to a for-profit model to facilitate more fundraising opportunities.

This potential deal underscores the growing appetite for AI investments and the shifting landscape dominated by innovative breakthroughs and fierce competition.

 

via Financial Times.

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