OpenAI is primed to become valued at $300billion despite having never turned a profit, fueling concerns over a potential stock market “bubble burst” in the wake of China’s Deepseek launch last month.
SoftBank is poised to become Sam Altman’s largest investor through a massive $40billion primary investment that would value the artificial intelligence company at $300bn post-money, CNBC reported.
This landmark deal would see SoftBank overtake Microsoft as OpenAI’s top backer, marking a significant shift in the AI industry’s power dynamics.
OpenAI’s valuation has nearly doubled since October, when private investors valued the ChatGPT maker at $157bn.
Sources initially expected the deal to value the artificial intelligence firm at $340bn, but it is understood that the final figure is likely to settle at $300bn.
This investment will be distributed over a 12 to 24-month period, with the initial payment expected as early as spring.
However, analysts are sounding the alarm that investor enthusiasm could be fueling an “bubble” in the US stocks that resembles the lead-up to the dotcom bust in 2000.
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Concerns have been raised over a potential stock market “bubble”
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Speaking to The Financial Times, billionaire investor Ray Dalio noted that “pricing has got to levels which are high at the same time as there’s an interest rate risk, and that combination could prick the bubble”.
These comments from the founder of hedge fund Bridgewater Associates reflect ongoing concerns from investors, who also have anxieties about elevated borrowing costs.
Tech stocks took a hit after the rollout of Deepseek, with many Wall Street analysts questioning whether Silicon Valley’s promises of an American-led AI future is all talk.
Under the terms of the deal, SoftBank will have the option to syndicate up to $10bn of the total investment amount.
This latest funding round follows SoftBank’s February commitment to spend $3billion annually on OpenAI’s technology for its own use and that of its subsidiaries, including British chip designer Arm.
Experts are warning the US economy could still face an economic downturn GETTY A significant portion of SoftBank’s investment will support OpenAI’s commitment to Stargate, a joint venture announced by President Donald Trump in January.
The Stargate initiative brings together SoftBank, OpenAI and Oracle in a collaborative effort to bolster US artificial intelligence infrastructure.
The venture is set to receive billions in investment to strengthen America’s AI capabilities, though specific funding allocations have not been disclosed.
With this announcement, OpenAI CEO Sam Altman appears to be strengthening his ties with the US Government, including with his $1million contribution to Trump’s inauguration and attendance alongside other tech industry leaders.
OpenAI recently launched ChatGPT Gov, a specialised AI platform designed for US government agencies.
The new platform offers enhanced security features compared to ChatGPT Enterprise, allowing government bodies to process sensitive information within secure hosting environments.
In parallel with its government initiatives, OpenAI has expanded its presence in Japan through a joint venture with SoftBank called “SB OpenAI Japan”.
The Japanese partnership aims to market OpenAI’s enterprise technology to Japanese companies, furthering the AI firm’s global reach.
These developments showcase OpenAI’s dual strategy of strengthening its government relationships whilst pursuing international expansion.
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Tesla CEO Elon Musk pictured on-stage with OpenAI CEO Sam Altman during an event called “What Will They Think of Next? Talking About Innovation” hosted by Vanity Fair GETTY IMAGES The company has maintained its aggressive market position since launching ChatGPT in late 2022, competing with major tech firms including Microsoft, Google, Amazon, Meta and Anthropic.
OpenAI’s latest funding round comes as Chinese competitor DeepSeek has seen its app climb to the top of Apple’s App Store rankings.
DeepSeek’s R1 model has attracted significant attention in US markets, particularly due to reports that it achieved its capabilities at a fraction of the cost of American rivals.
OpenAI’s CEO Sam Altman acknowledged the achievement, writing on X that DeepSeek’s R1 was “impressive”. Altman added: “we will obviously deliver much better models and also its legit invigorating to have a new competitor!”