SoftBank is currently engaged in discussions to invest as much as $25 billion in OpenAI, as part of a broader collaboration that could see the Japanese conglomerate allocate over $40 billion towards artificial intelligence initiatives in partnership with the Microsoft-backed startup, according to a report by the Financial Times.
If finalized, this investment would position SoftBank as OpenAI’s largest single investor, surpassing Microsoft, which has been a key backer of the ChatGPT creator since its initial investment in 2019. This potential deal follows the recent announcement that both companies plan to jointly invest $100 billion in Stargate, a U.S.-based data center project for OpenAI, with the possibility of expanding that investment to $500 billion over the next four years.
The proposed investment from SoftBank would range between $15 billion and $25 billion directly into OpenAI, in addition to its $15 billion commitment to the Stargate project. OpenAI is also expected to contribute approximately $15 billion towards Stargate, with SoftBank’s equity investment potentially covering OpenAI’s infrastructure commitments related to the project.
These negotiations come in the wake of market disruptions caused by the recent release of DeepSeek’s R1 “reasoning” model, which was developed on a relatively modest budget. This development has sent shockwaves through public markets, leading to significant losses for major players like Nvidia, which saw its market value drop by as much as $589 billion in a single day before experiencing a slight recovery. Investors are increasingly concerned that substantial investments in costly AI hardware may not be necessary if companies can achieve comparable results with less expensive resources.
OpenAI has claimed that it has found evidence suggesting that DeepSeek utilized its proprietary models to train the R1 and other models through a method known as “distillation.” This technique allows developers to replicate similar performance levels with smaller models at a significantly reduced cost. OpenAI argues that this practice violates its terms of service, which explicitly prohibit the use of outputs to develop competing models.
The potential agreement between OpenAI and SoftBank, as reported by the Financial Times, has not yet been finalized. If it proceeds, it would mark SoftBank founder Masayoshi Son’s most significant investment since his controversial $16 billion injection into WeWork. Additionally, this partnership could lessen OpenAI’s reliance on Microsoft for computing resources, especially as Microsoft has recently agreed to relinquish its status as OpenAI’s exclusive cloud provider.
According to the report, approximately 20% of Stargate’s funding is anticipated to come from equity investments, while the remaining funds will be secured through debt backed by assets and cash flow. OpenAI, which achieved a valuation of $157 billion last year, is also in discussions to transition into a for-profit entity to facilitate further fundraising efforts.
