SoftBank to Invest $500M in OpenAI, Sees Room for AI Growth

In a bold shift, SoftBank is looking to invest $500 million in OpenAI, marking its first direct stake in the company. The Japanese conglomerate, led by billionaire Masayoshi Son, is reportedly participating in a funding round valuing OpenAI at a remarkable $150 billion. Thrive Capital is expected to lead the round with a $1 billion investment, and potential participants include Microsoft, Nvidia, Tiger Global, and the UAE-backed fund MGX, according to a report from The Information.

This move represents one of SoftBank’s most substantial investments in AI to date, coming at a time when the company is shifting back into "offense mode" after years of financial restraint.

SoftBank’s AI Investments and the Vision Fund

SoftBank’s AI investments have been relatively modest until now, especially when compared to its first Vision Fund, which famously backed companies like WeWork. Despite WeWork’s collapse, Vision Fund 2 has seen success with its investment in Arm, the U.K.-based chip designer that went public in 2023, driving $4.6 billion in gains for the fund. SoftBank’s decision to now back OpenAI aligns with Son’s ongoing vision of playing a significant role in the AI revolution.

Earlier this year, SoftBank participated in a funding round for Perplexity AI, an AI-powered search engine, but passed on investing in other OpenAI competitors like Mistral AI, Anthropic, and Cohere. Son, who has publicly praised OpenAI’s CEO Sam Altman and described himself as a “heavy user of ChatGPT,” appears eager to take a more active role in AI development through this investment.

Is SoftBank Late to the AI Party?

While SoftBank’s move may seem late to some, analysts believe OpenAI still has significant growth potential despite its current $150 billion valuation. Brendan Burke, PitchBook’s senior emerging technology analyst, noted that OpenAI’s annualized revenue reached $3.4 billion in June and is on track to achieve $5 billion in recurring revenue, primarily driven by its ChatGPT product.

The broader market for generative AI software is projected to double next year, surpassing $30 billion. According to Burke, this revenue growth will support further valuation increases, motivating employees to stay and helping OpenAI progress toward the ambitious trillion-dollar valuation envisioned by CEO Sam Altman.

Challenges Ahead for OpenAI

SoftBank’s investment comes at a time when OpenAI is facing internal challenges. Last week, the company saw the departure of three key executives, and Altman is reportedly considering a restructuring that would alter the company’s capped-profit model. Altman addressed the recent changes, stating that leadership transitions are natural for fast-growing companies.

Additionally, Apple reportedly dropped out of participating in this funding round, which could impact the valuation as OpenAI seeks to remove the profit cap for investors.

What This Means Moving Forward

SoftBank’s decision to back OpenAI may be a late entry, but it signals a strong belief in the future of AI and OpenAI’s role in shaping that future. As OpenAI continues to scale, the investment will likely strengthen its position in the highly competitive AI landscape, while giving SoftBank a key foothold in the next phase of AI innovation.