SoftBank's Ambitious Plan to Invest in OpenAI

SoftBank Group SFTBF SFTBY is currently in discussions to potentially invest between $15 billion and $25 billion in OpenAI. If successful, this significant investment could position SoftBank as the largest shareholder in the organization responsible for ChatGPT, overtaking Microsoft Corporation MSFT, which has already committed nearly $14 billion.

What Happened: The capital raised from this investment would help bolster OpenAI’s ongoing commitment to the Stargate AI infrastructure project. This joint venture includes other notable players such as Oracle Corp. ORCL and the UAE-based MGX fund, according to the Wall Street Journal, citing sources familiar with the negotiations.

The Stargate initiative is ambitious, aiming to allocate up to $500 billion into AI data centers over the next four years. Importantly, the funding from SoftBank toward OpenAI would be separate from its anticipated $15 billion investment in the Stargate project itself.

Despite the scale of this potential investment, it is noteworthy that SoftBank might own a smaller stake in OpenAI’s for-profit division compared to Microsoft. This discrepancy is due to Microsoft’s earlier financial engagements with the AI company, as reported.

Why It Matters: OpenAI’s valuation has skyrocketed, reaching $157 billion after a $6.6 billion funding round last year. During that period, SoftBank had initially invested $500 million into OpenAI, indicating its long-standing interest in the AI space.

Alongside this development, other AI enterprises have also been rapidly growing. For instance, Elon Musk's xAI has achieved an estimated valuation of $50 billion in 2024. Additionally, Perplexity AI, backed by Jeff Bezos, recently raised $500 million, bringing its valuation to $9 billion. Anthropic, which has the backing of Google, is reportedly in late-stage discussions to secure $2 billion in funding, aiming for a valuation of $60 billion.

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investment, OpenAI, SoftBank