Behind OpenAI's $40B Funding: Musk's Hijack Attempt, Stargate Delay & AI Capital Bubble

The biggest news in AI last week was undoubtedly OpenAI’s record-breaking $40 billion funding round.

To put this in perspective: it exceeds half of all global AI startup funding in 2024. If completed, OpenAI’s valuation would surpass $300 billion, making it one of the world’s most valuable private companies.

But behind the headlines, I noticed some telling details worth examining.

The ‘Other Side’ of This Funding

First, this money comes with strings attached.

According to disclosures, SoftBank committed $40 billion, but only $7.5 billion arrives immediately. The remaining $32.5 billion depends on OpenAI completing its transformation from a ‘non-profit’ to a ‘for-profit’ company by end of 2026.

This condition isn’t trivial. OpenAI’s current equity structure is exceptionally complex—Sam Altman himself owns no shares; early investors and employees hold ‘profit participation rights’ rather than traditional equity. Untangling this structure involves legal and financial challenges possibly more complex than training GPT-5.

More subtly, post-transformation OpenAI becomes a ‘Public Benefit Corporation.’ What does this mean? Simply: the company must answer to both shareholders and public interest. This dual mission typically commands a valuation discount in capital markets.

Musk’s ‘Hijack’ Attempt

The same day OpenAI announced its funding, Musk wasn’t idle.

He offered $97.4 billion to acquire all OpenAI assets—yes, more than double SoftBank’s valuation. This bid was obviously disruptive in nature.

Musk’s logic is simple: if OpenAI is becoming for-profit, it should follow market rules. His willingness to pay more suggests OpenAI is undervalued.

But Altman’s response was equally direct: ‘No thank you.’

This clash appears to be about price, but fundamentally it’s about vision.

Musk was among OpenAI’s earliest and largest funders, and among the first to warn about ‘AI safety.’ But he and Altman developed fundamental disagreements over OpenAI’s direction—Musk wanted it to remain open-source and non-profit; Altman chose closed-source and commercialization.

This feud likely continues.

Stargate’s Awkward Position

Another point worth watching: progress on the ‘Stargate’ initiative.

This $500 billion AI infrastructure project, announced by OpenAI, SoftBank, and Oracle, was once called ‘the largest AI investment in human history.’ But months later, substantive progress seems limited.

Reports suggest SoftBank’s own financial condition isn’t rosy. Having lost tens of billions on WeWork and other investments, this massive OpenAI bet amounts to going ‘all-in.’

Meanwhile, Oracle—though a Stargate participant—likely cares more about its cloud services business. Through OpenAI partnership, Oracle hopes to capture AI cloud market share—currently dominated by AWS, Azure, and GCP.

AI Capital Bubble?

Speaking of capital, we must address the sensitive topic: AI bubble.

AI investment reached historic highs over the past year. VC firms rush to bet on AI startups; valuations soar. OpenAI’s $300 billion valuation makes it one of the world’s most valuable private companies.

But is this valuation justified?

Revenue-wise, OpenAI reportedly exceeds $5 billion annualized. This implies a price-to-sales ratio around 60x. For comparison, Google’s P/S is roughly 5x; Microsoft’s around 10x.

What does this mean? The market prices in extremely optimistic expectations: exponential revenue and profit growth for years to come.

Can these expectations be met?

Honestly, I don’t know. AI technology advances rapidly, but commercialization challenges are equally massive. Training costs rise; competitors multiply; regulatory pressure increases. Whether OpenAI maintains its lead remains uncertain.

My Perspective

As a former big-tech engineer turned independent developer, I have mixed feelings about this capital game.

On one hand, I genuinely benefit from rapid AI advancement. Competition among OpenAI, Anthropic, Google drives model capability improvements, giving small developers like me powerful AI capabilities at low cost.

On the other hand, I worry about over-capitalization. When a company hits $300 billion valuation, its decision logic fundamentally shifts—from ‘doing the right thing’ to ‘maximizing shareholder value.’ Whether this transformation serves AI’s long-term development remains to be seen.

Finally, regardless of whether OpenAI’s valuation is $300 billion or $500 billion, AI’s ultimate value depends on real benefits it delivers to people.

Capital can accelerate technology development, but technology itself is fundamental. Hopefully after this capital frenzy, we’ll see something genuinely valuable.

What’s your take on OpenAI’s funding round? Welcome to share in comments.