A few weeks ago, SoftBank Group Corp. founder Masayoshi Son stood beside US President Donald Trump to unveil the ambitious Stargate Project—an artificial intelligence venture with OpenAI that could exceed $500 billion in cost. Now, Son is exploring funding mechanisms to bring this vision to life.
The Japanese billionaire is considering project financing, a model often used for large-scale infrastructure developments such as the Trans-Alaskan pipeline. This approach, widely deployed in oil and gas projects, has the advantage of requiring minimal upfront capital from key investors while securing long-term financing based on projected cash flows.
Funding strategy for stargate
SoftBank is assessing ways to incorporate elements of project financing for Stargate, which encompasses multiple data centre and power-generation initiatives. According to sources familiar with the discussions, one proposal under review would see SoftBank, OpenAI, and partners—including Oracle Corp. and Abu Dhabi’s MGX—invest around 10% of the total cost in equity while leveraging debt markets for the remaining sum.
Announced with significant fanfare, the SoftBank-OpenAI venture aims to develop tens of gigawatts of data centre capacity, potentially making it the most extensive computing infrastructure rollout in history. The first data centre is already under construction in Abilene, Texas, with additional sites being identified across a dozen states.
Son told Trump that an initial $100 billion would be deployed immediately, but funding for the rest of the project remains uncertain. Talks are ongoing to bring in more stakeholders.
Market challenges and financial complexities
The financing discussions come at a time when AI competition is intensifying. The rise of Chinese startup DeepSeek and its open-source, cost-effective AI models presents a potential challenge to proprietary AI systems like those developed by OpenAI. Furthermore, OpenAI is currently facing an unsolicited takeover bid led by Elon Musk, adding further uncertainty to Stargate’s financial planning.
On paper, a 10% equity stake in Stargate equates to roughly $50 billion. If SoftBank and OpenAI hold equal shares, their contributions would be between $15 billion and $25 billion each, with Oracle and MGX providing smaller amounts. However, the financing strategy is structured around separate, multi-billion-dollar projects rather than a single lump-sum investment.
According to sources, SoftBank intends to use a mix of preferred equity, mezzanine debt, and senior bank loans to meet funding requirements. The final proportion of these financing instruments will depend on the participation of additional investors, with some projects focusing specifically on semiconductors or server development.
One potential funding structure could see common equity comprising 10%, preferred equity and mezzanine debt making up 20%, and senior debt accounting for 70% of the total. Alternatively, another model might involve 10% in common equity, 40% in preferred stock and mezzanine debt, and 50% in senior debt. These high-leverage structures are similar to those used in major infrastructure projects, such as power plants and telecom networks. However, SoftBank’s ability to access Japan’s ultra-low interest rates and attract retail bond investors could ease its financial burden.
Investor concerns and market conditions
No final decisions have been made, and discussions remain fluid. SoftBank is engaging with potential partners, and the lead investors may ultimately decide on alternative financing strategies depending on market conditions. The viability of the proposed structure remains uncertain, as project financing is contingent on predictable cash flow projections—something AI services have yet to demonstrate.
A SoftBank representative declined to comment on the matter. OpenAI’s Chief Financial Officer Sarah Friar recently stated in a blog post that the venture will follow a “structured, phased approach to investment.” While OpenAI, SoftBank, Oracle, and MGX are the initial investors, additional institutional partners are expected to join.
Son, alongside OpenAI CEO Sam Altman, recently met with Japanese Prime Minister Shigeru Ishiba and Samsung Electronics Chairman Jay Y. Lee to seek further backing for the project. “I want to expand Stargate to Japan,” Son declared during Altman’s global tour.
Broader AI financing trends
SoftBank’s funding efforts coincide with a broader shift in AI financing, where companies are turning to unconventional methods to cover soaring costs. For example, Nvidia-backed startup CoreWeave has begun using GPUs as collateral for loans, securing billions in funding with support from firms like Blackstone and Magnetar. However, this model is based on the assumption that high-end Nvidia chips will maintain their value—an assumption being tested by the emergence of lower-cost AI models like DeepSeek.
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Few, if any, data centre initiatives have attempted to leverage debt to the extent SoftBank is considering for Stargate.
SoftBank’s financial position and market outlook
SoftBank’s approach to Stargate is drawing scrutiny from investors and creditors, many of whom are wary of Son’s history of high-stakes investments. On Wednesday, SoftBank is expected to report a net loss of approximately ¥155 billion ($1 billion) for its fiscal third quarter, based on Bloomberg analysts’ estimates.
Much of SoftBank’s bottom line hinges on the performance of its portfolio companies. The Vision Fund’s public holdings reportedly lost $700 million in the December quarter, largely due to declining share prices in Coupang Inc. and Didi Global Inc.
Furthermore, SoftBank’s private investments are under pressure. ByteDance, the owner of TikTok, is facing regulatory scrutiny in the US and may be forced to sell or shut down the platform. Meanwhile, Indonesian agritech startup eFishery, once valued at $1.2 billion, is on the brink of liquidation amid allegations of accounting fraud.
The future of stargate
As SoftBank navigates these challenges, the success of the Stargate Project will depend on securing stable, long-term financing while managing the risks associated with AI’s rapidly evolving landscape. Whether Son’s vision for a $500 billion AI empire materialises remains to be seen, but the financing complexities underscore the enormous stakes involved.
