In a blockbuster for the world of tech, the Japanese investment giant SoftBank has completed its commitment to pour $40 billion into OpenAI. The news was confirmed this week, in what was one of the biggest private investments into a technology company. After delivering the final $22.5 billion last week, SoftBank now has a major stake in the company that developed ChatGPT, an indication of how much it is betting on A.I.’s future.
A Bold Bet on the Future
It’s not just that SoftBank’s leader, Masayoshi Son, has spoken of his enthusiasm for artificial intelligence by saying he is “all in” on the technology. The company had to pull off some heavy lifting to get the multibillion-dollar deal across the finish line. In December, SoftBank offloaded all its stakes in the chipmaker Nvidia, valued at nearly $6 billion. Son acknowledged that he didn’t actually want to sell those shares, but needed the cash to ensure the OpenAI deal closed.
The $40 billion outlay values OpenAI at roughly 11% of SoftBank. That’s not just owning a slice of a famous company, it’s being a leader in the next great wave of technology, according to SoftBank. They believe A.I. will someday remake how everyone lives and works, so they are fighting to ensure that when all of those people arrive, they’ll speak the company’s digital language. The investment makes OpenAI worth about $260 billion, according to people familiar with the terms, and turns it into one of the most valuable private companies in the world.
Building the Backbone of AI
That $40 billion will be spent largely on creating the enormous computers and data centres required to run AI. Dubbed “Stargate,” the project is a collaboration of OpenAI, SoftBank and Oracle. Working together, they intend to commit hundreds of billions of dollars in the next several years to create tech hubs around the United States. These will be the homes of the incredibly powerful chips that enable AI to think, learn, and solve really hard problems.
SoftBank is also acquiring other companies to assist with this effort. This week alone, they agreed to acquire DigitalBridge, a data centre company, for $4 billion. SoftBank, by owning both the AI software (such as ChatGPT) and the hardware it runs on, is attempting to create a full system. They want to make sure they have the physical real estate and electricity needed to accommodate an army of artificial intelligence users around the world.
A Growing List of Big Backers
SoftBank is not the only tech behemoth investing in OpenAI. Microsoft has sunk tens of billions into the field over the last several years, and other companies, including Amazon and Disney, are expressing interest. Disney recently invested $1 billion, which enables the OpenAI video tools to trade with popular characters like Mickey Mouse. That’s a sign that even old-school movie studios find value in what OpenAI is working on.
OpenAI is also future-proofing itself by striking deals with chipmakers like Nvidia and AMD. They have pledged to spend more than $1.4 trillion building out their systems over the next few years. Such huge spending is needed because constructing advanced AI systems consumes an enormous amount of energy and specialised hardware. Now that SoftBank’s $40 billion is all paid up, OpenAI has the cash to take its technology even further.
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