OpenAI is on the brink of finalizing a monumental $40 billion funding round, with SoftBank Group Corp. leading the charge. The deal, set to be one of the largest in history, has drawn interest from prominent investors such as Magnetar Capital, Coatue Management, Founders Fund, and Altimeter Capital Management, according to sources familiar with the matter.
Magnetar Capital, a hedge fund based in Evanston, Illinois, is expected to contribute up to $1 billion, though the individuals involved requested anonymity due to the private nature of the talks. This funding round will value OpenAI at an impressive $300 billion, almost double its previous valuation of $157 billion following its last funding round in October.
As part of the agreement, SoftBank will initially invest $7.5 billion, alongside $2.5 billion from a broader investor syndicate. A second tranche of $30 billion is scheduled for later this year, with SoftBank contributing $22.5 billion and the syndicate providing an additional $7.5 billion.
Despite the significant deal, SoftBank’s stock dropped by as much as 4.7% in Tokyo, with concerns about the financial implications of such a large investment causing a widening in the company’s credit default swaps.
SoftBank declined to comment on the matter, and representatives for OpenAI, Magnetar, and Founders Fund also remained tight-lipped. Coatue and Altimeter did not respond to requests for comment.
This funding round highlights the growing investor excitement surrounding OpenAI, which has been experiencing rapid expansion amid the global surge in artificial intelligence adoption. According to sources, OpenAI expects its revenue to exceed $12.7 billion this year, more than tripling its earnings from $3.7 billion in 2024. The company is also forecasting an even steeper growth trajectory, with projected sales reaching $29.4 billion in 2026.
However, OpenAI faces mounting costs associated with developing state-of-the-art AI, including expenses for chips, data centers, and talent acquisition. Despite the rapid revenue growth, the company does not anticipate achieving positive cash flow until 2029, when it expects to generate a staggering $125 billion in revenue.
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