It appears that Microsoft has been less involved in its billion-dollar collaboration with OpenAI, noticeably since OpenAI unveiled their half-a-trillion-dollar investment in the Stargate project together with SoftBank.
The action made a significant impact on the technology sector, as Salesforce CEO Marc Benioff forecasted that Microsoft would no longer rely on OpenAI for their artificial intelligence initiatives in the future.
Despite no longer being the sole cloud service provider for OpenAI, Microsoft maintains a privilege called “right of first refusal.” This means that if OpenAI requires cloud infrastructure or services, Microsoft is their top choice to provide these resources.
Microsoft actively participated in OpenAI’s financial investments, contributing $6.6 billion alongside NVIDIA, Thrive Capital, and SoftBank during one of OpenAI’s funding rounds at the end of last year. This investment prevented OpenAI from facing a potential loss of $5 billion within a year, which could have led to bankruptcy.
In the past few days, OpenAI successfully completed a significant funding round, amassing an impressive $40 billion from investors. This monumental investment has increased its market capitalization to an astounding $300 billion, as reported by CNBC. As stated by PitchBook, this fundraising event could very well be the largest private technology funding round ever recorded.
Notably, SoftBank took the lead in contributing $30 billion, while Microsoft and Thrive Capital chipped in an additional $10 billion. With these funds, OpenAI aims to expand and advance further in the realm of artificial intelligence technology.
SoftBank may dethrone Microsoft at the cost of bankruptcy
In a report by The Wall Street Journal (WSJ), SoftBank could potentially be taking on more debt than it can manage with its substantial investment in OpenAI. As per the publication, roughly $10 billion of SoftBank’s massive investment is planned to be borrowed from Japanese bank Mizuho.
The anticipated $10 billion transaction is slated for closure in April, with the rest of the funds expected to be provided by 2026’s early stages. SoftBank is taking a significant gamble on OpenAI, suggesting that we’re about to enter a new era dominated by artificial intelligence. In essence, SoftBank sees OpenAI as being the entity most likely to attain what is known as Artificial General Intelligence.
Financial analysts remain cautious regarding the future of AI profitability, with SoftBank’s situation serving as a prime example. According to S&P Global, SoftBank’s financial outlook appears to be worsening, largely due to its investment in OpenAI. This investment is expected to lead SoftBank into debt and potentially poor credit ratings.
In an effort to make a profit, AI research labs are finding it challenging to demonstrate financial success in the current market. Experts warn that investor enthusiasm may be dwindling, potentially indicating they will soon redirect their investments elsewhere. Interestingly, predictions suggest Microsoft could purchase OpenAI within the next 3 years.
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2025-04-02 17:09