SoftBank is nearing a $40 billion primary investment in OpenAI, valuing the AI company at $260 billion pre-money and $300 billion post-money, according to CNBC’s David Faber. Payments are expected over the next 12-24 months, starting as soon as this spring. SoftBank also has the option to syndicate up to $10 billion of the total amount.

If completed, this investment would make SoftBank the leading backer of OpenAI, surpassing Microsoft. OpenAI was last valued at $157 billion by private investors in October 2024. The deal, which initially anticipated a $340 billion valuation, is now expected to settle closer to $300 billion.

A portion of the funding will be directed toward Stargate, a joint venture between SoftBank, OpenAI, and Oracle, announced by President Donald Trump in January 2024. This initiative aims to invest billions of dollars in U.S. AI infrastructure.

Since its launch in 2022, OpenAI’s flagship ChatGPT chatbot has been at the forefront of the generative AI race, competing against major players such as Elon Musk’s xAI, Microsoft, Google, Amazon, Meta, and Anthropic. The generative AI market is projected to surpass $1 trillion in revenue within the next decade.

This funding round follows SoftBank’s previous announcement that it will allocate $3 billion annually to OpenAI’s technology, including applications for its subsidiaries such as British chip designer Arm. The companies also formed a joint venture, “SB OpenAI Japan,” to promote OpenAI’s enterprise technology to businesses in Japan.

OpenAI’s recent release, ChatGPT Gov, specifically designed for U.S. government use, allows agencies to input sensitive information into OpenAI’s models within secure, government-controlled environments. This move comes as OpenAI aims to further solidify its relationship with the U.S. government. CEO Sam Altman has signaled support for former President Trump, contributing $1 million to Trump’s inauguration and attending events with tech CEOs.

Meanwhile, OpenAI faces increasing competition from Chinese rival DeepSeek, which made waves in January with its breakthrough R1 model. The DeepSeek app quickly soared to the top of the Apple App Store rankings, with reports suggesting its model was trained at a fraction of the cost of U.S. competitors. Altman acknowledged the achievement, expressing confidence that OpenAI’s models would outpace DeepSeek’s.

This latest funding round marks a pivotal moment for OpenAI as it continues to expand its presence in the global AI landscape while facing growing competition.