SoftBank’s $40 Billion OpenAI Gamble: All-In for an AI Empire or Headed for a Burst Bubble?

TradingKey - According to CNBC, Japanese investment giant SoftBank has completed its final capital injection into OpenAI, The colossal investment, totaling $40 billion, has been fully deployed. This investment has increased SoftBank's stake in OpenAI to over 10% , making it the second-largest external shareholder after Microsoft. This move is widely regarded by the market as the company's "all-in" bet on its AI strategy.

Since the beginning of the year, OpenAI has been assailed by multiple negative developments: Google's Gemini 3 model has surpassed OpenAI in several aspects, leading to potential market share loss for OpenAI; furthermore, OpenAI's infrastructure and operational costs are prohibitively high, making fundraising a bottomless pit.

As the AI bubble theory has gained traction since 2025, the market is no longer entirely optimistic about comprehensive investments in the AI sector. SoftBank's investment in OpenAI is nothing short of a massive gamble: either it will emerge as the biggest winner in the AI domain, or it stands to lose everything.

Selling Nvidia for OpenAI: SoftBank’s $40B AI Pivot

A $40 billion investment in OpenAI was finalized in February this year, with SoftBank planning to inject funds in tranches over 12-24 months at a pre-money valuation of approximately $260 billion.

According to sources familiar with the matter, the investment is structured in three parts: approximately $10 billion to support OpenAI's operations and capital expenditures, provided as a syndicated loan; approximately $8 billion as direct equity investment; and approximately $22-22.5 billion as the final large capital injection. A portion of these funds will be used to support OpenAI's AI infrastructure, including the "Stargate Project" developed in collaboration with Oracle.

SoftBank divested its entire stake in Nvidia last month, totaling approximately $5.8 billion. SoftBank founder Masayoshi Son stated that the company would not have taken this action were it not to raise capital to support its investments in OpenAI and data center projects.

In addition to its investment in OpenAI, SoftBank also announced on Monday its plan to acquire data center operator DigitalBridge for $4 billion. DigitalBridge manages over $100 billion in data center assets, and the market views this acquisition as a strategic move by SoftBank to advance its "Stargate" AI computing power project and strengthen its data infrastructure footprint.

For years, SoftBank has been heavily investing in technology and AI sectors and is demonstrating an even more aggressive stance in 2025: Beyond its significant investment in OpenAI, a leader in large language models, SoftBank is also delving into the foundational AI data center sector. This demonstrates SoftBank's commitment.

Son’s Calculus: IPO Windfalls and the ASI Vision A successful

Regarding SoftBank's significant $400 billion investment, market sentiment is polarized. Optimists view the bet on AI large language model giants as undoubtedly highly visionary, suggesting OpenAI could become the next Google or Microsoft. Conversely, pessimists focus on concerns regarding SoftBank's own financial condition and the potential AI bubble.

From a financial perspective, even prior to its public listing, OpenAI has already generated substantial returns for SoftBank. SoftBank's interim financial report, through the end of September, showed a net profit of 2.924 trillion Japanese Yen, surging 2.9 times year-over-year and setting a record for the highest semi-annual profit in Japanese corporate history. A portion of this profit originated from "fair value changes" in its technology assets, including the continuous appreciation of OpenAI's valuation.

Should OpenAI successfully go public, SoftBank stands to receive even more lucrative returns. In a secondary market stock sale completed in October this year, OpenAI's valuation had already climbed to approximately $500 billion, making it the world's most valuable startup. If OpenAI maintains this valuation upon its IPO, SoftBank's stake would be worth approximately $50-55 billion. Recent reports suggest that OpenAI is initiating a new funding round at a valuation of $750 billion, while market expectations even anticipate its IPO valuation could reach up to $1 trillion. .

Regarding its investment strategy, SoftBank is not confined to the large language model sector; instead, it has implemented a full-stack layout, encompassing various stages from hardware like Arm and data centers such as DigitalBridge to large language models like OpenAI. A successful IPO for OpenAI will assist SoftBank in vertically integrating its AI ecosystem. In short, SoftBank could then control an entire "AI empire".

Furthermore, a successful OpenAI IPO will be a crucial step for Masayoshi Son to realize his "ASI" vision. ASI, or Artificial Super Intelligence, refers to a system whose intelligence is 10,000 times the sum of all human intellect. In Son's view, companies possessing ASI will hold control over the future world. As arguably the most prominent player among large language model companies, OpenAI represents the best investment choice for ASI.

Moreover, the investment legend of SoftBank and Masayoshi Son will once again be validated. Son's investment approach has consistently been aggressive and sharp, exemplified by the highly successful initial $20 million investment in Alibaba in 2000, which generated hundreds of times its return and cemented his status as an investment magnate. SoftBank's full acquisition of Arm in 2016 was another triumph. If OpenAI successfully goes public, it will boost capital market confidence in SoftBank's future prospects and its Vision Fund.

Currently, OpenAI has completed a restructuring, officially transitioning into a Public Benefit Corporation (PBC), clearing legal hurdles for its planned IPO, which could launch as early as 2026.

SoftBank's Internal and External ChallengThe Danger Zone: Debt Redlines and Valuation Reality Checkses: Debt Redline and AI Bubble Risk

Although there are multiple favorable factors for SoftBank, all these positive developments are predicated on the successful initial public offering (IPO) of OpenAI. Prior to this, SoftBank faces numerous concerns: Can OpenAI successfully go public? Will it maintain its high valuation at the time of its listing? And how will SoftBank manage its balance sheet before the IPO?

Since the beginning of this year, SoftBank has gone to extreme lengths, virtually selling off everything it owns, to raise the $40 billion for OpenAI. It has not only divested its NVIDIA holdings and sold $9.1 billion worth of T-Mobile shares, but also implemented layoffs at its Vision Fund, now facing a liquidity crunch. According to SoftBank's interim financial report for fiscal year 2025, as of September 30 this year , its debt-to-equity ratio reached 1.41, and its current ratio fell below 1, indicating that the company's short-term liquid assets are insufficient to cover its short-term liabilities.

Furthermore, in October this year, media outlets cited sources stating that SoftBank has borrowed a total of $5 billion, using Arm shares as collateral. Including previous credit lines, SoftBank has already borrowed $18.5 billion against Arm shares.

Although this financing method is not uncommon, SoftBank's reliance on a single asset is excessive, should Arm's share price fall significantly and require SoftBank to make margin calls, it could jeopardize SoftBank's already strained financial position or force SoftBank to sell more Arm shares, accelerating the stock's decline.

Moreover, OpenAI's IPO prospects are not optimistic. As mentioned previously, Google's Gemini 3.0, launched in November this year, is considered OpenAI's large language model's strongest competitor to date, significantly eroding market confidence in OpenAI becoming the sole dominant player in the field. As OpenAI loses its absolute technological moat, the IPO myth of a $1 trillion valuation is also being questioned.

In early 2025, DeepSeek's emergence directly challenged OpenAI's model of burning cash for R&D without regard for cost, while the growing 'AI bubble' narrative intensified market doubts about the sustainability of this model. How to accelerate commercialization and improve capital efficiency, have become the market's primary concerns this year.

However, OpenAI's performance in commercialization and cost control has fallen short of market expectations. OpenAI's primary revenue source is user subscriptions, which are crucial for sustaining its high valuation. Nevertheless, its user growth has shown significant volatility this year; reports indicate that its weekly active users increased by 42% month-over-month in January, but the growth rate slowed to 13% by September. Concurrently, OpenAI's capital expenditures are substantial and continue to rise.

All these factors lead the market to question whether this startup can truly justify an optimistic valuation ranging from $300 billion to $1 trillion. Should OpenAI's valuation bubble burst, the pillars of the SoftBank empire would collapse.