SoftBank Group (SFTBY) is working to close a $22.5 billion funding deal with OpenAI (PC:OPAIQ) before the end of the year. To do this, the Japanese tech firm is selling key investments and considering new loans backed by shares of Arm Holdings (ARM).
Claim 50% Off TipRanks Premium and Invest with Confidence
- Unlock hedge-fund level data and powerful investing tools designed to help you make smarter, sharper decisions
- Stay ahead of the market with the latest news and analysis so your portfolio is always positioned for maximum potential
The deal, one of SoftBank’s largest yet, signals a shift in focus. Almost all resources are now moving toward AI and infrastructure. According to sources, the money will help OpenAI scale its training and data center projects, which come with fast-growing costs.
Meanwhile, SFTBY shares climbed a respectable 5.33% on Friday, closing at $55.31.
Where the Funds Are Coming From
SoftBank has already sold its entire $5.8 billion stake in Nvidia (NVDA), the AI chip leader. It also sold $4.8 billion in T-Mobile US (TMUS) holdings. At the same time, the company has slowed most new investments, with every deal above $50 million now needing direct approval from CEO Masayoshi Son.
In addition, SoftBank is looking at other ways to raise funds. It has over $11.5 billion in unused margin loans backed by shares in Arm Holdings, the British chip designer it controls. With Arm stock rising sharply after its IPO, SoftBank now has more flexibility to borrow.
According to filings, SoftBank also held $27.2 billion in cash at the parent level as of September. It still owns about 4% of T-Mobile US, which was worth around $11 billion at the end of the third quarter. The company may also sell part of its stake in Didi Global, which is planning to relist in Hong Kong after leaving U.S. markets in 2021.
PayPay IPO Delayed, But Still On Track
SoftBank had planned to raise more capital from a public listing of PayPay, its Japan-based payments app. That IPO, originally expected this month, has been delayed to early 2026. Sources say the U.S. government shutdown caused timing issues. The offering is expected to raise over $20 billion.
Despite the delay, SoftBank remains focused on securing enough liquidity to meet its commitment to OpenAI. The full funding is expected to be delivered by the end of 2025.
Why OpenAI Needs the Cash
OpenAI is under pressure to grow its computing power and protect its lead in AI tools like ChatGPT. The company is building out massive data centers and is working with SoftBank and other partners on a $500 billion project called Stargate. These facilities will be used to train and run AI models across the U.S.
CEO Sam Altman has told staff that OpenAI is entering a “code red” phase to improve ChatGPT. The company is now pausing other product launches to stay ahead of rising competition from Google’s Gemini platform.
In October, Altman said OpenAI hopes to build 30 gigawatts of AI computing capacity. That would cost an estimated $1.4 trillion. According to him, OpenAI wants to add one gigawatt of compute every week. Each gigawatt currently costs more than $40 billion to deploy.
On a final note, SoftBank sees AI as its next growth engine and is restructuring its portfolio to focus on long-term value in the sector. The firm invested in OpenAI when it was valued at $300 billion earlier this year. Reports suggest OpenAI is now in talks at a valuation closer to $900 billion, which would give SoftBank strong upside on paper.
Is SFTBY a Good Stock to Buy?
SoftBank is thinly covered by the Street analysts, with only one analyst covering the stock, resulting in a Hold consensus and no price target.
