SoftBank has finalized its $40 billion investment in OpenAI, marking a significant move in the competitive landscape of artificial intelligence.
SoftBank has officially completed its commitment to invest $40 billion in OpenAI, as reported by CNBC’s David Faber. The final tranche of the investment, amounting to between $22 billion and $22.5 billion, was transferred last week.
Sources indicate that the Japanese investment giant was in a race to finalize this substantial commitment, utilizing various cash-raising strategies, including the sale of some of its existing investments. Reports suggest that SoftBank may also tap into its undrawn margin loans, which are secured against its valuable stake in chip manufacturer Arm Holdings.
Prior to this latest investment, SoftBank had already invested $8 billion directly in OpenAI, along with an additional $10 billion syndicated with co-investors. With this latest infusion of capital, SoftBank’s total stake in the AI company now exceeds 10%.
In February, CNBC reported that SoftBank was nearing the completion of its $40 billion investment in OpenAI, which was valued at $260 billion pre-money at the time. This investment represents one of the most significant bets made by SoftBank CEO Masayoshi Son as he intensifies the company’s efforts to establish a strong foothold in the rapidly evolving AI sector.
To finance this investment, Son sold SoftBank’s $5.8 billion stake in Nvidia and divested $4.8 billion from its stake in T-Mobile U.S. Additionally, the company has made workforce reductions. SoftBank Chief Financial Officer Yoshimitsu Goto previously informed investors that these asset sales are part of a broader strategy aimed at balancing growth with financial stability.
The surge in investments in artificial intelligence has been notable, with OpenAI committing over $1.4 trillion to infrastructure development over the coming years. This includes partnerships with major chipmakers such as Nvidia, Advanced Micro Devices, and Broadcom.
SoftBank has a history of investing heavily in AI and was an early backer of Nvidia. Recently, the conglomerate announced a $4 billion acquisition of DigitalBridge, a data center investment firm, to further bolster its AI initiatives. Last month, SoftBank liquidated its entire $5.8 billion stake in Nvidia, a move that sources indicated would help support its investment in OpenAI.
In addition to SoftBank’s significant investment, OpenAI is reportedly exploring a potential investment exceeding $10 billion from Amazon. Disney has also joined the ranks of investors, committing $1 billion in an equity investment deal that allows users of OpenAI’s video generator, Sora, to create content featuring licensed characters like Mickey Mouse.
This latest wave of investments underscores the growing interest and competition in the AI sector, with major players positioning themselves to capitalize on the technology’s transformative potential.
According to CNBC, SoftBank’s aggressive investment strategy reflects its commitment to remaining at the forefront of the AI revolution.