OpenAI, the artificial intelligence startup behind ChatGPT, is reportedly negotiating to secure up to $40 billion in new funding, which could push the company's valuation to approximately $340 billion, according to The Wall Street Journal. This massive funding round signifies not just the financial ambitions of OpenAI but also highlights the intensifying competition within the AI industry.
SoftBank, the Japanese telecommunications and investment firm, is poised to lead this funding round by investing between $15 billion and $25 billion. If successful, this deal would enable SoftBank to surpass Microsoft as OpenAI’s largest backer. Currently, Microsoft holds the title with nearly $14 billion invested to date. Microsoft, which has been closely linked with OpenAI since the launch of ChatGPT, agreed to relinquish its status as OpenAI’s exclusive cloud service provider under the new partnership agreements.
The negotiations between OpenAI and SoftBank are reportedly still underway, making the exact details subject to change. An individual familiar with the discussions noted, “The talks areongoing and the amountthat SoftBank could investin primary equityinto OpenAI is amoving target.” Meanwhile, OpenAI has positioned itself to utilize the new capital efficiently, earmarking it to support operational expenses and significant commitments such as the Stargate project. This ambitious venture aims to create AI data centers across the United States, as part of the collaboration with SoftBank and Oracle, promoting infrastructural improvements for the AI sector.
Previously, OpenAI was valued at approximately $157 billion when it raised $6.6 billion during its last funding round in October. It's noteworthy how quickly the valuation has escalated. This influx of capital would help address OpenAI's past challenges, particularly since, according to reports, OpenAI experienced losses of around $5 billion against revenues of $3.7 billion for the year 2024, underlining the financial pressures faced by technology startups.
While SoftBank’s involvement could significantly benefit OpenAI, it also reflects broader market trends. The surge of investment in AI can be attributed to the increasing recognition of the sector's potential. Echoing these sentiments, OpenAI’s board stated, “The hundreds of billions of dollarsthat majorcompanies are nowinvestinginto AIdevelopment showwhat it willreallytake for OpenAI tocontinue pursuingthe mission.”
Not everyone appears to be on board with OpenAI’s ambitious plans. High-profile figures like Elon Musk have expressed skepticism about the financial viability of such projects. Musk voiced concerns last week, critiquing the Stargate proposal and asserting, “They don’t actually have the money.” This skepticism adds another layer of intrigue to the story, highlighting how polarizing the developments surrounding OpenAI have become.
Interestingly, the emergence of competitors such as DeepSeek also plays a role in OpenAI’s funding strategy. With DeepSeek’s rapid rise and its app's recent success on the Apple App Store, pressure is mounting on OpenAI to innovate continually to maintain its leading position. During an event hosted by OpenAI, CEO Sam Altman acknowledged the growing competition, noting DeepSeek's capabilities and reiteration of the need for democratic AI. The sentiment reflects not only on the competitive environment but also on the evolution of AI technology and its diverse applications.
Should SoftBank secure its proposed investment, it would represent one of the largest investments made by the firm, surpassing even its notorious $16 billion deal with WeWork. Investors are increasingly intrigued about whether the infusion of capital will stabilize or accelerate the potential for OpenAI within the burgeoning tech sphere.
This funding round and the potential new partnerships with significant firms like SoftBank and Oracle could also alleviate some fears about the financial futures of AI startups since massive investments signal confidence. Meanwhile, the growing prominence of AI-linked cryptocurrencies stands to benefit from this investment sentiment, as the resurgence might stabilize the market fractured by rapid changes instigated by competitors like DeepSeek.
Overall, the developments around OpenAI’s funding negotiations are under constant scrutiny. With the AI field becoming more crowded and competitive, the stakes are high for all parties involved. For now, industry watchers and investors eagerly await how negotiations progress and the eventual impact on the broader technology sector.