SoftBank Group Corp (SFTBY) (SFTBF) has officially closed the deal on its eye-watering $40 billion investment in OpenAI, completing months of financial gymnastics to make it happen.
Sources familiar with the transaction confirmed to CNBC's David Faber on Tuesday that the Japanese investment giant wired the final tranche of approximately $22 billion to $22.5 billion last week. This wraps up a commitment that started with an $8 billion direct investment and included organizing a $10 billion syndicate for the ChatGPT creator.
The numbers here are staggering. SoftBank now owns more than 10% of OpenAI following a deal valued at a pre-money valuation of $260 billion. To put that in perspective, SoftBank just bought a stake in an AI company valued higher than most Fortune 500 companies.
Where the Money's Going
OpenAI isn't planning to just park this cash in a savings account. A significant chunk of the capital will fund "Stargate," an artificial intelligence infrastructure joint venture that brings together OpenAI, SoftBank, and Oracle Inc. (ORCL). Think massive data centers and computing power to keep AI models humming along.
The Fire Sale Behind the Scenes
Here's where things get interesting. Coming up with $40 billion isn't like finding spare change in your couch cushions, even for SoftBank. The company has been on an absolute tear liquidating assets to fund CEO Masayoshi Son's AI vision.
SoftBank already sold its entire position in Nvidia Corp. (NVDA) and dumped billions of dollars worth of T-Mobile US, Inc. (TMUS) shares. The irony of selling Nvidia stock to buy into AI is not lost on anyone, but Son clearly has his own ideas about where the AI gold rush leads.
The company has also dramatically slowed new Vision Fund investments and instituted a new policy requiring Son's personal approval for large deals. When you're scrambling to raise $22.5 billion by year-end, you tend to tighten the purse strings elsewhere.
But the asset sales might not be done. SoftBank is reportedly exploring additional divestitures, preparing a potential IPO for PayPay (its digital payments business), and considering margin loans backed by its soaring Arm Holdings Plc (ARM) stake. That last option is particularly noteworthy since Arm's stock has been on a tear, making it an attractive source of liquidity without actually selling shares.
The Bigger Picture
This deal represents one of the largest single investments in artificial intelligence infrastructure to date. SoftBank is essentially betting that OpenAI will remain at the forefront of the AI revolution and that owning a substantial piece of that future is worth reshaping its entire portfolio.
The cost of competing in artificial intelligence has become astronomical, and SoftBank is demonstrating just how far companies are willing to go to secure their position. Whether this aggressive strategy pays off depends largely on whether OpenAI can maintain its lead in an increasingly competitive landscape.
For now, though, the deal is done, the money has changed hands, and SoftBank has officially planted its flag as one of OpenAI's largest backers.
