SoftBank’s Potential Investment in OpenAI Could Rival TikTok Owner ByteDance

SoftBank is currently in discussions to invest up to $25 billion in OpenAI, a move that could potentially value the company at around $300 billion. This significant investment could potentially elevate OpenAI to the position of being the joint-second most valuable tech company, right after SpaceX. Additionally, OpenAI is considering injecting a substantial $15 billion into the Stargate AI infrastructure project.

SoftBank's Investment Plans

SoftBank is gearing up to spearhead a new wave of investment in OpenAI, potentially valuing the company at $300 billion. If successful, this move would place OpenAI on par with ByteDance, the parent company of TikTok. Talks of SoftBank investing up to $25 billion in OpenAI were first reported by the Financial Times.

Implications and Comparison

While SpaceX currently holds the title of the most valuable private company globally, OpenAI could soon secure the second spot alongside the Chinese tech giant ByteDance. Presently, OpenAI holds the position of the third-most valuable private tech firm. If OpenAI achieves its target valuation of $300 billion, it would effectively double its current valuation of $157 billion.

Valuation Contrast

SpaceX currently boasts a valuation of around $350 billion, following a buyback initiative in December. Similarly, ByteDance witnessed an increase in its valuation to $300 billion after a buyback offer in November. OpenAI could potentially join the league of centibillion-dollar valued companies, alongside Stripe and Shein, which hold valuations of $70 billion and $66 billion, respectively.

Financial Backing and Investor Landscape

Prior to SoftBank's latest investment discussions, OpenAI had raised close to $20 billion from prominent investors like Thrive Capital, Khosla Ventures, and Nvidia. If SoftBank proceeds with an investment ranging between $15 to $20 billion, it would surpass Microsoft as OpenAI's primary investor. This strategic move would solidify SoftBank's position in the generative AI sector and align with the visionary goals of its founder, Masayoshi Son, towards achieving artificial super intelligence.

Collaborative Initiatives and Future Prospects

SoftBank's interest in OpenAI extends beyond mere investment, with plans to establish Stargate, a joint venture focusing on AI infrastructure projects in the US. With an initial commitment of $500 billion over four years, this project is set to kick off with $100 billion in immediate deployment. The involvement of key players like Oracle and the UAE's MGX, in addition to SoftBank and OpenAI, suggests a promising future for AI advancements.

While specific funding sources remain undisclosed, SoftBank's proposed equity investment could potentially empower OpenAI to channel around $15 billion into the Stargate initiative. Both SoftBank and OpenAI have refrained from providing official comments on these developments.

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By: rkanetkar@insider.com (Riddhi Kanetkar,Hasan Chowdhury)
Title: SoftBank’s Potential Investment in OpenAI Could Rival TikTok Owner ByteDance
Sourced From: www.businessinsider.com/openai-valuation-softbank-investment-spacex-bytedance-2025-1
Published Date: Fri, 31 Jan 2025 14:15:29 +0000