OpenAI is reportedly close to finalizing a $40 billion funding round led by Japan’s SoftBank Group, potentially lifting the company’s valuation to $300 billion and nearly doubling its previous valuation but not without a catch.
On Friday, The Wall Street Journal has reported that lead investor SoftBank plans to reduce its funding to $20 billion if OpenAI does not transition into a for-profit company by the end of 2025. OpenAI’s planned shift from a non-profit venture to a for-profit firm faces significant hurdles, including regulatory scrutiny and opposition from co-founder Elon Musk.
In October 2024, the AI research company raised $6.6 billion, bringing its valuation to $157 billion. According to CNBC, OpenAI’s revenue is expected to triple to $12.7 billion in 2025. Microsoft, OpenAI’s principal investor and key strategic partner, recorded $13 billion in annual recurring revenue in the fourth quarter, up 175% from a year earlier.
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Other investors include a number of other private equity firms including Magnetar Capital, Coatue Management, and Alitmeter Capital, according to a Bloomberg report. An earlier report said that Softbank would invest as much as $25 billion in OpenAI, making it the company’s biggest backer since Microsoft.
Part of this funding would likely be used for the Stargate Project, backed by President Donald Trump. The Stargate Project is a joint venture by Oracle, Softbank and OpenAI to build AI infrastructure such as data centers in the United States. Executives from OpenAI, SoftBank and Oracle plan to invest $500 billion in the Stargate Project over the next four years. This is in line with Trump’s position on AI, which emphasized maintaining U.S. leadership in AI research and development.
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SoftBank has previously announced its collaboration with OpenAI on the development of Cristal Intelligence, an enterprise AI solution designed for secure, customized business automation. This venture has OpenAI contributing to AI research, technology, and engineering while SoftBank provides its sales staff, operational expertise, and business insights. The companies also announced the establishment of a joint venture called SBOpenAI Japan, for accelerating the deployment and marketing of Cristal Intelligence.
The news comes at a time of increasing competition for OpenAI, from rival companies like Google, xAI, Perplexity, Anthropic, and other prominent AI players as well as the Chinese startup DeepSeek, which made significant waves in the AI world with its cost-effective AI model.
Editor’s note: The above article has been updated to reflect latest information.