OpenAI Eyes $340B Valuation in Massive $40B Funding Push Led by SoftBank

According to reporting from the Wall Street Journal, OpenAI is in discussions to secure as much as $40 billion in fresh capital at a $340 billion valuation. SoftBank Group Corp., the major Japanese technology investor, is anticipated to spearhead the round, potentially putting in somewhere between $15 billion and $25 billion of its own capital while simultaneously working to bring other investors into the deal.

This development arrives merely three months after SoftBank participated in a $6.6 billion funding round that valued OpenAI at $157 billion. The fact that SoftBank is reportedly willing to invest again at such a substantially elevated valuation demonstrates confidence in the company's trajectory. In September, the New York Times disclosed that OpenAI anticipated finishing 2024 with $3.7 billion in revenue and projected it could hit $100 billion by 2029.

Despite rapid revenue expansion, OpenAI remains unprofitable. According to the Journal, some of the capital being raised will go toward sustaining the company's money-losing operations.

A significant portion of the funding will support Project Stargate, an infrastructure undertaking that OpenAI unveiled at the White House last week. Working alongside SoftBank, Oracle Corp., and the investment firm MGX, OpenAI intends to construct a series of artificial intelligence data centers across the United States. The initiative carries an estimated price tag of up to $500 billion.

The Information reported last week that OpenAI and SoftBank have each pledged approximately $19 billion toward Project Stargate. According to sources speaking with the Financial Times, the two organizations intend to finance the remainder of the data center infrastructure through capital raised from existing investors and debt arrangements.

The competitive landscape has shifted recently with the emergence of new rivals. Earlier this month, Chinese artificial intelligence research lab DeepSeek made publicly available a large language model named R1, which demonstrated performance levels matching OpenAI's o1 model, which is designed for reasoning tasks, across multiple evaluation metrics. The $40 billion funding round positions OpenAI to better contend with DeepSeek and other emerging competitors.

DeepSeek's R1 release indicates that well-funded startups may not hold a monopoly on developing cutting-edge models. In an academic paper, DeepSeek's research team disclosed that constructing R1 required only $5.6 million in graphics processing unit computing hours—a tiny fraction of what OpenAI is believed to have invested in developing its own language models.

In response to R1's launch, OpenAI committed to deliver much better models in the coming period. The anticipated funding infusion should strengthen the company's ability to realize this commitment. Additionally, the capital injection would extend OpenAI's runway while it works toward achieving profitability in delivering its artificial intelligence services.