SoftBank is reportedly close to finalizing a $40 billion primary investment in OpenAI at a pre-money valuation of $260 billion. According to sources cited by CNBC’s David Faber, this investment would elevate OpenAI’s post-money valuation to $300 billion, with funding expected to be distributed over the next 12 to 24 months, starting as early as spring.
Investment Details
If this investment goes through, SoftBank would become OpenAI’s largest backer, surpassing Microsoft, which previously valued the company at $157 billion in October. Originally, this funding round was anticipated to value OpenAI at $340 billion, but later estimates suggest it will be closer to $300 billion.
A portion of the funding will support OpenAI’s involvement in Stargate, a joint venture between SoftBank, OpenAI, and Oracle, aimed at investing billions in U.S. AI infrastructure.
AI Competitive Landscape
Since the launch of its ChatGPT chatbot in late 2022, OpenAI has entered a competitive landscape filled with major players like Elon Musk’s xAI, Microsoft, Google, Amazon, Meta, and Anthropic. Analysts project the generative AI market to exceed $1 trillion in revenue within the next decade.
SoftBank’s commitment to OpenAI also includes an annual spending plan of $3 billion on OpenAI technology for its subsidiaries, such as British chip designer Arm. Additionally, they have announced a joint venture, “SB OpenAI Japan,” to promote OpenAI’s enterprise technology in Japan.
OpenAI New Offerings and Market Dynamics
In January, OpenAI introduced ChatGPT Gov, an AI platform tailored for U.S. government use, emphasizing enhanced security for handling sensitive information. This move is part of a broader strategy by OpenAI and CEO Sam Altman to strengthen ties with the current administration, evidenced by Altman’s previous contributions to Donald Trump.
OpenAI’s funding comes in the wake of competition from DeepSeek, a Chinese startup that recently launched its R1 model, causing a stir in the market due to its cost-efficient training. Altman acknowledged DeepSeek’s R1 as “impressive,” expressing confidence in OpenAI’s ability to deliver superior models.
