OpenAI Securing $40B In New SoftBank Funding, Scouting 16 States For Stargate Projects

UPDATE, FEB. 10, 4:05 P.M. ET: Shortly following the publication of this story, The Wall Street Journal reported that an Elon Musk-led group made a $97.4B, unsolicited bid to buy OpenAI.

SoftBank plans to invest $40B in OpenAI as the ChatGPT creator considers 16 different states for the massive Stargate data center development joint venture. 

SoftBank and OpenAI are close to finalizing the $40B primary investment — a deal that would give OpenAI a $260B valuation, CNBC reported.

The San Francisco-based artificial intelligence firm was last valued at $157B in October following a $6.6B funding round that included SoftBank, Microsoft and AI chip designer Nvidia. 

In SoftBank’s latest OpenAI investment, the Japanese tech investor is expected to pay out the funding over the next one to two years, with the initial payment coming as early as this spring, according to CNBC. SoftBank is permitted to bring on additional investors to syndicate as much as $10B of the promised funding. 

With the new funding, SoftBank would surpass Microsoft as OpenAI’s chief backer. Microsoft and OpenAI’s partnership, codified through Microsoft’s $13B investment in early 2023, has elevated both firms to the head of the pack in Big Tech’s AI arms race. 

For OpenAI, the partnership firmly established the company as the benchmark for a successful AI startup and allowed it to rapidly scale up its computing and data center infrastructure almost entirely on Microsoft’s dime. The bulk of the company’s computing power has been housed in Microsoft facilities near Phoenix.

But in recent months, OpenAI has begun expressing impatience at what it says is Microsoft’s slow pace of infrastructure investment and has been aggressively pursuing alternative development partners to expand its data center footprint. 

The highest-profile of these efforts is Stargate — the AI data center joint venture between OpenAI, SoftBank, cloud provider Oracle and Emirati sovereign wealth fund MGX — a deal first announced at an Oval Office press conference by President Donald Trump. The JV, which also includes Microsoft and Nvidia as partners, is committing an initial $100B to building the infrastructure needed to keep up with the rise of AI, with the investment growing to as much as $500B over the next four years. 

Part of the $40B in new funding OpenAI secured from SoftBank last week is expected to be used for the AI firm’s commitment to Stargate, according to CNBC. 

Also last week, OpenAI’s leadership provided new details about the scope of the Stargate project, saying the firm is now considering 16 different states to host data center campuses as part of the development effort, CNBC reported. 

While Stargate’s first 10 data centers are already under construction in Abilene, Texas, at a site leased from data center firm Crusoe, OpenAI said it will begin rolling out new development sites with at least 1 gigawatt of capacity “on a rolling basis” in the coming months. Ultimately, the company plans to build between five and 10 campuses as part of Stargate. 

OpenAI is considering building in Arizona, California, Florida, Louisiana, Maryland, Nevada, New York, Ohio, Oregon, Pennsylvania, Utah, Texas, Virginia, Washington, Wisconsin and West Virginia, according to CNBC. The firm’s leadership said all 16 states have expressed “real interest” in the project following a request for proposals from OpenAI last month.