Shuli Ren: OpenAI is so yesterday — Even for SoftBank

Key topics:SoftBank’s massive OpenAI bet shows strong paper gains but uncertaintyAI focus shifts to chipmakers; Arm & Intel outperform OpenAI stakeLiquidity strain: margin loan risk & SoftBank pivots to new AI firm Roze.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox every morning on weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Shuli Ren.SoftBank Group Corp. founder Masayoshi Son is known for making audacious multibillion-dollar bets. Some acquisition deals, such as chip designer Arm Holdings Plc, have paid off nicely, while others, most notoriously WeWork Inc., became big flops. So what about OpenAI, by far Son’s largest investment? In March, the ChatGPT maker completed a historic funding round, raising $122 billion, with SoftBank promising to put in $30 billion more. Upon completion of this follow-on investment, the Japanese conglomerate will have deployed $64.6 billion into the AI startup, for about a 13% stake. Son has done very well with the first $34.6 billion, most of which was invested last year at a $260 billion valuation. The latest funding round, which pegs OpenAI’s valuation at $852 billion, will allow his firm to book $45 billion in paper gains, implying a 129% return, according to Bloomberg Intelligence. .Whether this year’s investment will pan out is far from clear, however. Since OpenAI’s March funding close, there have been noticeable shifts in capital markets. Anthropic PBC, founded in 2021 by a group of former OpenAI employees, is gaining momentum with a new model that the company claims can detect security vulnerabilities in critical software programs. It’s weighing a fresh funding round at over $900 billion valuation, more than what OpenAI fetched in March. .Read more:. Softbank eyes record $25bn investment in OpenAI.Global equity markets have also moved on from developers that build foundational models to chipmakers that might benefit from the AI data-center boom. The Philadelphia Semiconductor Index is witnessing a blistering rally, gaining 54% since late March. Arm, acquired a decade ago for around $31 billion, is worth more than $220 billion. Much of the value creation was incurred in recent weeks, as investors bet that data centers will deploy a lot more central processing units, or CPU, to power AI applications. Arm, which traditionally makes money by licensing its CPU architecture to bigger companies like Nvidia Corp., has decided to make the chips itself. The win from Intel Corp. is even more impressive. A $2 billion investment made last August is now worth $9.4 billion, or about 370% in total return. Seen in this light, Son’s $30 billion commitment to OpenAI this year is no longer looking so savvy. .But liquidity is as important as paper gains. There are already signs that capital markets are souring on Son’s biggest bet. SoftBank is seeking a $10 billion margin loan backed by its OpenAI holdings. Discussions have included a potential initial interest margin of about 425 basis points over benchmark, working out to about 7.88% interest despite its collateralized nature. This cost of borrowing is high, considering SoftBank paid only 8.5% for an unsecured 10-year dollar note in April.Arm and Intel’s liquidity conditions are marvels by comparison. Despite Arm’s low public float — SoftBank’s stake is about 87% — the chip designer’s daily turnover has ranged from $1.4 billion to $1.7 billion lately, allowing traders to easily enter and exit multimillion-dollar positions. This in turn gives bankers’ comfort to provide low-cost margin loans, allowing SoftBank to cash out without offloading its assets. The fact that SoftBank can’t cash out from OpenAI is a big problem for Son, who habitually uses leverage to juice up returns. The firm is staring at a $32 billion funding shortfall, based on estimates from research outlet CreditSights. .Read more:.DCCs (inward listing of US treasury notes) means South Africans can hold cash in dollars.This perhaps explains why SoftBank is planning to create an AI and robotics company, named Roze, and list it in the US later this year. After all, OpenAI’s pathway to a public listing is becoming hazy. It has reportedly missed its own revenue targets and discussed spinning out loss-making robotics and consumer-hardware divisions. The group is planning to hold an analyst day at a data-center facility in Texas in July to promote the Roze IPO. By talking up physical AI instead, Son is essentially admitting that even SoftBank is moving on..© 2026 Bloomberg L.P.

Shuli Ren: OpenAI is so yesterday — Even for SoftBank

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