OpenAI is now on the verge of securing a record-breaking $40 billion funding round, with SoftBank Group Corp. as the primary investor. According to several reports, Magnetar Capital, Coatue Management, Founders Fund, and Altimeter Capital Management are also in discussions to participate in the investment. If finalized, this funding round would represent the largest private investment in AI history. This development comes a month after initial reports emerged on the matter, revealing that the Japanese conglomerate aimed to finalize a primary investment of $40 billion in the US firm, at a pre-money valuation of $260 billion.
As part of the deal, SoftBank is expected to commit an initial $7.5 billion, with an additional $2.5 billion coming from a syndicate of investors. A second tranche of funding is planned for later in the year, amounting to $30 billion, which will include $22.5 billion from SoftBank and another $7.5 billion from the investor group. Among the other participating firms, Magnetar Capital, a hedge fund based in Evanston, Illinois, is reportedly considering an investment of up to $1 billion. However, representatives from OpenAI, Magnetar, and Founders Fund have declined to comment, while Coatue Management and Altimeter Capital have not responded to inquiries.
Should the funding round occur, it would boost OpenAI’s valuation to $300 billion, marking a major jump (of almost two times) from its previous $157 billion valuation in October 2023. This would mark a major win for the AI firm as well – OpenAI has seen tremendous growth since launching ChatGPT in late 2022 and continues to attract major investments as AI becomes an increasingly crucial tech across multiple industries and sectors. The firm has already made a name for itself in the generative AI space with ChatGPT and GPT-4o, the fresh infusion of capital will provide the company with more resources to accelerate research, add to the capabilities of its existing AI model, as well as maintain the edge over rivals in the AI landscape, like Google DeepMind, Anthropic, and xAI. With SoftBank as a key financial backer, OpenAI could also deepen its AI partnerships, particularly in Asia, where SoftBank has strong market influence.
As for SoftBank, the conglomerate has made a name for itself as a big investor in AI infrastructure. In addition to its latest investment in OpenAI, the Japanese conglomerate has pledged billions of dollars to Project Stargate, a large-scale AI infrastructure initiative based in Abilene, Texas, and a joint venture involving OpenAI, Oracle Corp., and MGX, aimed at expanding AI data center capabilities to support the increasing demand for computational power required by modern AI models. Greater computational power is essential for training and deploying more advanced AI systems, which is where these investments come in and contribute to the industry’s continued growth.
