SoftBank, a major Japanese investment company, is currently in discussions to invest up to $25 billion in OpenAI, the organization behind the popular AI technology ChatGPT. This investment is part of a larger partnership that could see SoftBank spend over $40 billion on various artificial intelligence projects alongside OpenAI, as reported by the Financial Times.
If this deal goes through, SoftBank would become OpenAI’s biggest financial backer, surpassing Microsoft, which has been investing in OpenAI since 2019. This potential investment comes shortly after both SoftBank and OpenAI announced plans to jointly invest $100 billion into a project called Stargate. Stargate is a U.S. data center initiative aimed at supporting OpenAI’s operations, and this investment could eventually grow to $500 billion over the next four years.
Specifically, SoftBank is looking to invest between $15 billion and $25 billion directly into OpenAI. In addition, SoftBank has already committed $15 billion to the Stargate project. OpenAI is also expected to contribute around $15 billion to Stargate, and SoftBank’s investment could help cover the costs related to the infrastructure that OpenAI needs to operate.
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These discussions are taking place against the backdrop of recent market changes, particularly after a Chinese company called DeepSeek unveiled its new AI model, the R1. This model was created with a relatively small budget and caused some concern in the stock market. For instance, Nvidia, a major chip manufacturer, saw its stock value drop by as much as $589 billion in a single day, as investors began to question whether the large investments in expensive AI hardware were still necessary if companies could achieve similar results with less costly resources.
OpenAI has also accused DeepSeek of using its proprietary technology to develop the R1 model through a method called “distillation.” This technique allows developers to create smaller models that perform similarly to larger ones at a much lower cost. OpenAI argues that this practice violates its rules, which prohibit using its outputs to create competing technologies.
The potential agreement between SoftBank and OpenAI, which is still in the negotiation stage, would mark a significant move for SoftBank’s founder, Masayoshi Son. This would be his largest investment since he put $16 billion into the co-working company WeWork. Additionally, this deal could help OpenAI become less reliant on Microsoft for computing resources, especially since Microsoft has recently agreed to step back from being OpenAI’s exclusive cloud service provider.
Regarding the Stargate project, it is expected that about 20% of its funding will come from equity investments, while the remaining funds will be raised through loans backed by assets and cash flow. OpenAI, which was valued at $157 billion last year, is also in talks to transition into a for-profit organization to help raise more funds for its initiatives.
