Is SoftBank ahead of Microsoft? Is the success of DeepSeek the primary reason behind this vast AI investment? Let’s have a look over investment strategies:
Direct Investment in OpenAI:
SoftBank is in discussions to invest between $15 billion and $25 billion directly into OpenAI. If the deal is finalized, it would position SoftBank as OpenAI’s largest investor, surpassing Microsoft’s commitment of $14 billion. Well, this is a small chunk. SoftBank and OpenAI will support the OpenAI Stargate project with a commitment of $19 B, a significant AI infrastructure announced on January 21, 2025. Key players like OpenAI, SoftBank, Oracle, and MGX came together in a joint $500 billion venture aiming to develop AI data centers in the U.S. over the next 4 years.
This deal marks SoftBank’s biggest AI push since its $16 billion investment in WeWork (which was abandoned later from $16B to $2B)
The reason behind this?
Multiple factors can be the reason for this:
- Strong commitment to AI or biggest bet? It shows SoftBank’s deep commitment to Open AI’s future.
- Power Shift: No reliance on Microsoft if the deal got set. As Microsoft was their exclusive cloud provider.
- DeepSeek R1 impact? Their rapid rise and shaking of the market have raised questions and concerns as well. AI hardware investments like Nvidia have lost their charm.
- Nvidia’s stock drop: Investors fear that AI models like DeepSeek are built at a lower cost and could disrupt big AI infrastructure spending.
- OpenAI vs DeepSeek: OpenAI has accused DeepSeek of using a technique called distillation to copy its models at a lower cost.
- OpenAI’s Future Plans: Their New Year resolutions have one aim: to become a for-profit entity and attract (of course) more funding.
What’s Next?
- If the deal got done, SoftBank’s investment could reshape OpenAI’s funding structure and reduce its dependency on Microsoft.
- The AI competition just got heated up after this, with DeepSeek’s low-cost agenda challenging the U.S. giants.
- Investors are rethinking their bet on AI infrastructures like Nvidia and Microsoft after seeing their major losses.
What are people saying?
SoftBank is in talks to invest as much as $25B in Open AI. Wait, but didn’t DeepSeek show that AI is cheap? Why would we see $25B investments? Maybe progress in technology doesn’t mean the destruction of computer needs. – Jose Najarro Stocks in his latest tweet on X. Well, on my behalf, Softbank’s investment in OpenAI isn’t shocking, but the stargate angle is interesting. Are they setting up for total AI infrastructure control? Time will surely unfold this mystery.
Read More: Revival of US Tech Stocks Ignited after DeepSeek’s AI sell-off