SoftBank’s All In on OpenAI and So Far It’s Paying Off

Masayoshi Son, the billionaire investor known for making risky bets that sometimes turn out so poorly Hollywood makes movies about them, made his biggest bet yet on OpenAI. 

Son, who’s called AI “humanity’s future,” has led SoftBank to pour $34 billion into ChatGPT-maker OpenAI so far — with a plan to add as much as $30 billion more to the pile during the AI company’s next funding round, the Financial Times reported.

Boosted by OpenAI returns, SoftBank swung to a $1.6 billion profit in the winter quarter after losing $2.4 billion in the same quarter a year ago. 

OpenAI by Proxy

As SoftBank ups its investment in OpenAI, investors could see the holding company as a way to gain exposure to the private AI company, which is expected to be valued at as much as $750 billion after its next raise. SoftBank’s shares have nearly doubled over the past 12 months. 

SoftBank made $4.3 billion on its OpenAI investment last quarter, for a total of $17 billion last year. Its returns on OpenAI last quarter made up the bulk of its $6.6 billion gain in its second Vision Fund, offsetting losses in its first fund, which took a hit in part from Korean retailer Coupang’s stock suffering after a data breach. 

At the same time, SoftBank is investing in the wider ecosystem that could pave OpenAI’s road to success:

• SoftBank’s CFO said Thursday that 60% of the company’s assets are tied to “ASI” or “Artificial Superintelligence” (future tech that Son’s described as 10,000 times smarter than humans). In addition to OpenAI, SoftBank has a majority stake in chip-maker Arm and has bought other companies in the semiconductor industry including Ampere and Graphcore. Last quarter, SoftBank scooped up a robotics company and an asset manager that specializes in AI. 
• On a larger stage, SoftBank is a leading investor in Stargate, the $500 million Trump-backed initiative to build and scale AI infrastructure in the US. SoftBank is also reportedly involved in a project that’s short-listed to be backed by Japan’s $550 billion planned investment in building AI in the US. On its home turf of Japan, the election of Prime Minister Sanae Takaichi on Sunday has boosted hopes of continued AI investments from SoftBank’s home country.

Eggs in One Basket: SoftBank nixed Nvidia from its roster for $5.8 billion and pared down its T-Mobile investment for $12.7 billion as it beefed up its stake in OpenAI. It also took out $27 billion in debt in the winter quarter. Son is known for taking risks … not all of which pay off. He famously lost fortunes when the dot-com bubble burst and WeWork’s cold-brew taps ran dry, though Jared Leto did play its bong-hitting founder in an eight-part mini series. As fears of an AI bubble loom over the industry, Son is betting that OpenAI can beat its competitors.