SoftBank in Talks to Invest $25 Billion in OpenAI, FT Says

In a significant development in the world of artificial intelligence, SoftBank is reportedly in talks to invest $25 billion in OpenAI, according to the Financial Times. This potential investment, which could reach over $40 billion when including the Stargate data center project, would make SoftBank OpenAI's largest single backer, surpassing Microsoft. The deal comes as OpenAI faces competition from Chinese firm DeepSeek, which has rattled public markets with its R1 reasoning model.

SoftBank's proposed investment in OpenAI represents its biggest bet since injecting $16 billion into WeWork. The Japanese conglomerate 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.

The talks come at a time when Chinese firm DeepSeek's release of its R1 reasoning model has shaken up the AI landscape. 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.

OpenAI has claimed 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. OpenAI says this would violate its terms of service, which prohibit using outputs to develop competing models.

OpenAI's deal with SoftBank, which the Financial Times reports has not yet finalized, would reduce OpenAI's dependence on Microsoft for computing resources. Microsoft recently agreed to give up its position as OpenAI's exclusive cloud provider. Around 20% of Stargate's funding is expected to be equity, with the remainder financed through debt secured against assets and cash flow.

OpenAI, which reached a $157 billion valuation last year, is also negotiating to become a for-profit company to facilitate additional fundraising. The potential investment from SoftBank would further strengthen OpenAI's position in the AI landscape and enable it to continue pushing the boundaries of AI capabilities and applications.