OpenAI, the maker of ChatGPT, is in talks to raise a staggering $40 billion in a fresh funding round, potentially doubling its valuation to between $300 billion and $430 billion, according to multiple reports. Japan’s SoftBank is set to lead the investment, contributing between $15 billion and $25 billion, making it OpenAI’s largest financial backer.
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The move comes just three months after OpenAI’s previous funding round, which valued the company at $157 billion. If successful, the latest investment would be one of the largest in Silicon Valley history, reflecting the immense capital required to develop cutting-edge artificial intelligence (AI) models.
Stargate: A $500 Billion AI Push
A significant portion of the funds will go toward OpenAI’s commitment to Stargate, a massive AI infrastructure project announced in partnership with SoftBank, Oracle, and Abu Dhabi’s MGX fund. Stargate aims to develop AI data centers, with a total investment expected to reach up to $500 billion over the next four years.
Reports indicate that OpenAI has pledged at least $18 billion to the project, while SoftBank has already committed over $15 billion. The initiative, backed by the U.S. government, is seen as a strategic move to maintain America’s dominance in AI technology against rising competition from China.
DeepSeek Sparks Panic in AI Market
The funding talks come amid growing concerns over Chinese AI startup DeepSeek, which recently unveiled R1, a chatbot that claims to rival ChatGPT at a fraction of the cost. The launch has sent ripples through the tech industry, raising fears that China may be catching up in the AI race.
In response, OpenAI announced that it was investigating whether DeepSeek had “inappropriately distilled” its models, hinting at potential intellectual property concerns. The company also vowed to work closely with the U.S. government to protect its AI technology from foreign competitors.
Elon Musk’s Criticism
OpenAI, originally founded in 2015 as a non-profit research lab by Sam Altman, Elon Musk, and others, has since evolved into a dominant force in AI development. Musk, who left OpenAI in 2018 due to conflicts with Tesla’s AI ambitions, has been openly critical of the company’s recent moves.
This month, Musk mocked the Stargate initiative, claiming that its investors “don’t actually have the money.” His remarks were swiftly dismissed by Altman, who responded that the billionaire’s claims were simply “wrong.”
Despite Musk’s skepticism, OpenAI’s commercial success has been undeniable. The company has attracted billions in funding from Microsoft, integrated its technology into mainstream products like Office, and is now among the world’s most valuable startups.
SoftBank’s AI Ambitions and Market Impact
SoftBank’s interest in OpenAI aligns with its broader strategy of shifting toward AI investments. The Japanese conglomerate, led by billionaire Masayoshi Son, has a history of making bold bets, including its early investments in Yahoo! and Alibaba.
However, SoftBank’s track record has been mixed, with some investments proving unsuccessful. Now, with its stake in British chip designer Arm and its growing focus on AI, the company is positioning itself at the forefront of the next technological revolution. Following news of its planned OpenAI investment, SoftBank’s stock rose 3% in Tokyo trading.
Rising Competition in AI Investment
OpenAI is not alone in the race to develop powerful AI models. Its competitors include Anthropic and Musk’s xAI, both of which have raised over $10 billion each to compete with tech giants like Google and Meta. Despite rising competition, OpenAI and its backers argue that achieving Artificial General Intelligence (AGI)—AI capable of matching human-level intelligence—requires unprecedented levels of investment in computing power, infrastructure, and talent.
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If OpenAI’s latest funding round succeeds, it would put the company on par with Elon Musk’s SpaceX, valued at around $350 billion, cementing its status as one of the most valuable startups in the world.