SoftBank has finalized a $40 billion investment in OpenAI, making it the startup’s largest backer and overtaking Microsoft in influence. The deal, valued at $300 billion post-money, positions OpenAI as the world’s most valuable AI startup and gives SoftBank a pivotal role in the future of artificial intelligence.
While Microsoft has been OpenAI’s primary investor and infrastructure provider, this new funding signals OpenAI’s increasing independence. The investment, which will be deployed over the next two years, is expected to fuel OpenAI’s expansion beyond Microsoft Azure and accelerate the Stargate Project, a large-scale AI infrastructure initiative backed by SoftBank, Oracle, and the U.S. government.
SoftBank’s shift toward OpenAI follows a broader strategic realignment. The company recently halted the use of DeepSeek AI across its subsidiaries, distancing itself from the Chinese AI provider amid growing regulatory scrutiny and security concerns. The decision came just days after SoftBank committed $3 billion annually to OpenAI for enterprise AI deployment in Japan.
SoftBank’s Investment Marks a Shift in AI Alliances
SoftBank’s growing presence in OpenAI reshapes the AI funding landscape, as Microsoft has historically been the company’s most influential partner. OpenAI’s reliance on Azure cloud services has been a defining factor in its growth, but the new funding allows OpenAI to diversify its computing infrastructure.
The Stargate Project, which aims to establish independent AI data centers in the U.S., represents a direct step in this direction.
Microsoft CEO Satya Nadella downplayed concerns over losing influence, stating, “OpenAI APIs are exclusive to Azure going forward even, so nothing changes there… OpenAI has committed to Azure in a very significant way.”
However, Microsoft has adjusted its agreement with OpenAI to include a right of first refusal (ROFR) clause, ensuring that OpenAI must use Azure unless Microsoft cannot meet its compute needs.
Despite Microsoft’s reassurances, OpenAI’s latest moves suggest a desire for greater autonomy. The company is already exploring alternative compute solutions, including custom AI chips through partnerships with Arm Holdings, a SoftBank subsidiary, as well as direct investments in AI infrastructure.
OpenAI’s Soaring Compute Costs Drive New Funding Strategy
The surge in AI compute costs is a key factor behind OpenAI’s push for additional funding. The company reported a $5 billion loss in 2024, with annual compute expenses projected to exceed $9.5 billion by 2026.
As AI models become more complex, the energy and hardware demands continue to rise, forcing OpenAI to seek new financial backing.
SoftBank’s investment aligns with its long-term AI ambitions, which extend beyond software into hardware and energy solutions. Through Arm Holdings, SoftBank is actively developing AI-optimized processors that could reduce OpenAI’s reliance on Nvidia GPUs, a major bottleneck in AI scalability.
If OpenAI integrates these chips, it could significantly cut operational costs while boosting efficiency.
AI Energy Demands Push OpenAI Toward Fusion Power
With AI models requiring ever-increasing amounts of electricity, OpenAI is also looking at alternative energy solutions, including nuclear fusion. OpenAI CEO Sam Altman, a major investor in Helion Energy, has championed fusion power as a long-term solution to AI’s energy demands.
Helion, a startup backed by SoftBank, Microsoft, and Altman himself, aims to build the world’s first commercial fusion power plant by 2028. In 2023, Microsoft signed an agreement to purchase Helion’s fusion-generated electricity, underscoring the growing need for scalable energy sources.
By securing SoftBank’s investment, OpenAI could accelerate its own fusion energy initiatives, ensuring access to sustainable power for AI infrastructure.
Regulatory Scrutiny and Geopolitical Implications
SoftBank’s investment in OpenAI arrives at a time of increasing global AI regulation. The U.S. government has already restricted the export of advanced AI chips to China, and security concerns surrounding Chinese AI models have led to multiple bans.
Texas has prohibited the use of DeepSeek AI, citing data security risks and the US congress is working on a ban for federal employees. The US Navy and NASA have already placed internal bans on the chatbot, while Texas became the first state to enforce a statewide prohibition.
Similar actions have been taken overseas, with Australia banning the AI tool from government networks earlier this week. And Italy’s data protection authority, Garante, has launched a formal investigation into DeepSeek.
South Korea’s government has also introduced internal measures to limit the use of DeepSeek AI in critical infrastructure. Security officials cited concerns that the chatbot’s data-processing mechanisms could expose classified information if deployed on government networks.
While SoftBank has not explicitly linked its shift from DeepSeek to OpenAI to these regulatory concerns, the timing suggests an effort to align with AI providers operating under Western governance frameworks.
The decision also follows Japan’s push for AI sovereignty, with SoftBank playing a key role in establishing local AI infrastructure through SB OpenAI Japan, a new joint venture launched to market OpenAI’s AI models in Japan.
SoftBank’s AI Hardware Ambitions: A Challenge to Nvidia?
SoftBank’s investment is not just about funding OpenAI—it is about controlling the future of AI infrastructure. Through Arm Holdings, SoftBank is investing heavily in AI-specific hardware, particularly chips optimized for large-scale AI workloads.
The AI chip market, currently dominated by Nvidia, is expected to exceed $100 billion by 2029, and SoftBank sees an opportunity to carve out a share.
SoftBank’s CEO Masayoshi Son has repeatedly emphasized the importance of AI-dedicated processors, stating that “software alone won’t be enough” to sustain the AI boom.
If OpenAI integrates Arm-based chips into its compute stack, it could reduce its reliance on Nvidia’s expensive H100 GPUs, which are currently in short supply due to high demand.
Microsoft’s Expanding AI Strategy
Despite losing its top investor position in OpenAI, Microsoft is not stepping away from AI investments. The company is pouring $80 billion into Azure AI infrastructure, ensuring it remains competitive even if OpenAI explores alternative compute solutions.
Microsoft has also broadened its AI strategy by investing in Mistral AI and supporting Anthropic’s Claude models. This diversification indicates that while Microsoft remains a core partner for OpenAI, it is preparing for a future where OpenAI is no longer entirely dependent on Azure.
Meanwhile, Microsoft’s partnership with OpenAI remains intact, with revenue-sharing agreements ensuring that Microsoft still benefits from OpenAI’s success. The AGI clause, which states that if OpenAI achieves Artificial General Intelligence, control will revert to a nonprofit board, is also under review—raising questions about whether Microsoft will maintain privileged access in the long term.
The Road Ahead for OpenAI and SoftBank
SoftBank’s $40 billion investment is more than just funding—it represents a strategic shift that could redefine AI infrastructure, energy solutions, and the hardware landscape. With Microsoft, SoftBank, and OpenAI all vying for control over AI’s future, the industry is entering a phase where corporate alliances are as important as technological advancements.
As OpenAI scales up its models and SoftBank strengthens its hardware and energy investments, the next few years will determine whether these partnerships create a new AI powerhouse—or fuel further competition between tech giants.
