"The $22.5 billion investment is one of the most ambitious moves by SoftBank founder Masayoshi Son (photo), who wants to reposition his company at the heart of the AI industry. The focus is almost entirely on OpenAI, which is rapidly developing into one of the most important players in generative artificial intelligence. This is according to Reuters. To secure the financing, SoftBank has already sold its entire stake in Nvidia"
"Behind the scenes, SoftBank still has several financial levers at its disposal. For example, the group can borrow additional funds using its stake in Arm as collateral, an option that has become more attractive as the share price has risen sharply since the IPO. In addition, SoftBank still has billions in cash on its balance sheet and holds stakes in various listed companies that can be monetized relatively quickly."
"The urgency is not without reason. OpenAI desperately needs the capital to expand its infrastructure. Together with SoftBank, the company is investing in large-scale data center projects. These are necessary for training and running increasingly powerful AI models. Meanwhile, competition is rapidly increasing. Among others, from Meta and Alphabet, which is fully committed to the same market with Google and the Gemini model."
SoftBank is committing $22.5 billion primarily to OpenAI to secure a central role in generative AI. The company sold its entire Nvidia stake and a large portion of its T-Mobile US shares, implemented internal cost and personnel cuts, and paused new investments to raise funds. SoftBank can also borrow against its Arm stake, monetize listed holdings, and use existing cash reserves. A PayPay IPO is a potential near-term funding source scheduled for early next year. OpenAI needs capital for large-scale data center projects to train and run more powerful models amid intensifying competition from Meta and Alphabet, and new investments could push its valuation toward $900 billion, generating substantial paper gains for SoftBank.
Read at Techzine Global
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