SoftBank in Talks to Invest Up to $25 Billion in OpenAI
Wednesday, Jan 29, 2025 9:22 pm ET
3min read 
In a significant development in the world of artificial intelligence (AI), SoftBank is reportedly in talks to invest up to $25 billion in OpenAI, the company behind the popular ChatGPT chatbot and other generative AI models. This potential investment, which has not been finalized yet, would make SoftBank OpenAI's largest single backer, surpassing Microsoft's initial investment in 2019 (Financial Times, 2024).
The deal comes after both companies announced last week they would jointly invest $100 billion in Stargate, a U.S. data center project for OpenAI that could expand to $500 billion over four years. SoftBank plans to invest $15 billion to $25 billion directly into OpenAI in addition to its $15 billion Stargate commitment. OpenAI will invest around $15 billion in Stargate, with SoftBank's equity investment potentially covering OpenAI's infrastructure commitment (Financial Times, 2024).
The talks come at a time when Chinese firm DeepSeek's release of its R1 reasoning model, which was built on a relatively modest budget, rattled public markets this week. The chip giant Nvidia lost as much as $589 billion in a day before making a slight recovery, as investors worried that big investments in expensive AI hardware might not be necessary if companies could achieve similar results with fewer resources (Financial Times, 2024).
OpenAI claimed earlier this week that it had found evidence that DeepSeek used its proprietary models to train its own open-source competitor through a technique called "distillation," which allows developers to achieve similar results on smaller models at a much lower cost. The company says this would violate its terms of service, which prohibit using outputs to develop competing models (OpenAI's blog post, 2023).
SoftBank's potential investment in OpenAI represents a significant bet on the future of AI, as OpenAI is at the forefront of generative AI research and development. This deal also reduces OpenAI's dependence on Microsoft for computing resources, allowing it to explore other cloud providers or even build its own infrastructure (Financial Times, 2024).
For SoftBank, this investment is part of a broader partnership that includes the $100 billion commitment to Stargate. This project could expand to $500 billion over four years, with around 20% of the funding expected to be equity. OpenAI will invest around $15 billion in Stargate, with SoftBank's equity investment potentially covering OpenAI's infrastructure commitment (Financial Times, 2024).
In conclusion, SoftBank's potential investment in OpenAI is a strategic move that aligns with both companies' long-term goals. For OpenAI, it provides access to significant financial resources and reduces dependence on a single backer. For SoftBank, it represents a significant bet on the future of AI and a chance to gain a larger stake in the AI startup. The potential investment comes at a time when the AI sector is facing increased competition and geopolitical uncertainties, but both companies remain committed to driving innovation and generating sustainable returns.
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