Softbank set to invest $40 billion in OpenAI at $260 billion valuation, sources say

SoftBank is close to finalizing a $40 billion primary investment in OpenAI at a $260 billion pre-money valuation, sources told CNBC’s David Faber.

SoftBank would pay out the funding, which would mean a $300 billion post-money valuation for OpenAI, over the next 12 to 24 months, with the first payment coming as soon as spring, CNBC’s David Faber reported Friday. SoftBank would be able to syndicate as much as $10 billion of the amount.

The new funding would mean SoftBank surpasses Microsoft as the artificial intelligence startup’s top backer. OpenAI was last valued at $157 billion by private investors in October.

The round was initially expected to award OpenAI a valuation of $340 billion, but a source familiar with the matter later told CNBC that the amount would be closer to $300 billion.

Part of the funding is expected to be used for OpenAI’s commitment to Stargate, sources told CNBC. Stargate is a joint venture between SoftBank, OpenAI and Oracle that was announced by President Donald Trump in January. The plan calls for billions of dollars to be invested in U.S. AI infrastructure.

OpenAI launched its ChatGPT chatbot in late 2022, kicking off the generative AI race. Since then, the company has aggressively competed against the likes of Elon Musk’s xAI, as well as Microsoft, Google, Amazon, Meta and Anthropic. The generative AI market is predicted to top $1 trillion in revenue within a decade.

The latest funding round comes after SoftBank in February committed to spend $3 billion per year on OpenAI’s tech for itself and its subsidiaries, including British chip designer Arm. SoftBank and OpenAI also announced a joint venture, billed as “SB OpenAI Japan,” which will market OpenAI’s enterprise tech to companies in Japan.

OpenAI in January released ChatGPT Gov, an AI platform built specifically for the U.S. government. The startup pitched the new platform as having more security than ChatGPT Enterprise. ChatGPT Gov will allow government agencies to feed “non-public, sensitive information” into OpenAI’s models while operating within their own secure hosting environments, the company said.

The government offering follows a series of moves by OpenAI and CEO Sam Altman that appeared to be aimed at appeasing Trump. Altman contributed $1 million to Trump’s inauguration, attended the event alongside other tech CEOs and has publicly signaled his admiration for the president. 

OpenAI’s new funding comes after Chinese rival DeepSeek saw its app soar to the top of Apple’s App Store rankings after its debut. DeepSeek’s breakthrough R1 model roiled U.S. markets on reports that its powerful model was trained at a fraction of the cost of U.S. competitors.

Altman described DeepSeek’s R1 as “impressive,” and wrote on X that “we will obviously deliver much better models and also it’s legit invigorating to have a new competitor!”

WATCH: Sam Altman: OpenAI has been on the ‘wrong side of history’ post-DeepSeek