The AI race is a cash game—And OpenAI and its allies are losing for now

SoftBank’s shares have tumbled 40% from late October, while Oracle’s stock has given up all gains made since early September, when the legacy database software company all of a sudden got an AI halo after announcing a $300 billion computing deal with OpenAI.

The trio are partners in the $500 billion Stargate AI infrastructure project, which aims to build data centers across the US. In addition, in March, SoftBank’s Chairman Masayoshi Son managed to strike a venture capital deal with Altman, promising to invest $30 billion by year-end.

Investors are now questioning the ChatGPT maker’s dominance after Alphabet released its newest multipurpose Gemini 3 model—which won glowing reviews—as well as how a weakened OpenAI may affect its partners’ businesses.

Valuing OpenAI at $500 billion, SoftBank’s stake in the unicorn accounts for just over 20% of its net asset value, or NAV. But what if OpenAI is not worth that much? It would be a substantial hit to the Japanese conglomerate. In the September quarter, SoftBank reported its best earnings in three years, thanks to a $12.8 billion fair value gain from its OpenAI shares. That will have to be reversed if the startup can’t maintain its current valuation at future funding rounds.

As an investment management company, SoftBank is assessed based on its NAV. One key metric investors pay attention to is how liquid its portfolio is and how quickly SoftBank can distribute cash back to shareholders. Currently, private holdings, including the 11% OpenAI stake, account for about 36% of SoftBank’s NAV, versus 21% at the beginning of the year, according to Bloomberg Intelligence.

To get a seat at Altman’s table, Son has been selling his most liquid holdings to raise money. He has offloaded his entire $5.8 billion stake in Nvidia, as well as $9.2 billion worth of T-Mobile US. Along with new bond sales, SoftBank managed to raise $30 billion, just enough to complete the OpenAI deal. But does this portfolio reshuffling benefit shareholders? SoftBank’s stock is now trading at a 32% discount to its NAV, reflecting market skepticism over Son’s investing track record.

As for Larry Ellison’s Oracle, the situation is arguably worse. How OpenAI plans to pay the $300 billion computing contract is anyone’s guess. The deal will span over five years, starting in 2027. Meanwhile, the startup is expected to make just $60 billion in sales then, even using the company’s own rosy outlook, which investors are starting to question with the arrival of Google’s Gemini 3.

Earlier this month, Altman said he doesn’t want US guarantees for his startup’s data centers, but it might make sense that the government builds and owns its own AI infrastructure, a nod to how expensive this endeavor has become.

At the same time, Oracle is already investing heavily to meet the outsized demand Altman promised. For the Stargate project, Ellison has made over $100 billion of capital commitments to lease data-center shells, which will show up on its financial statements over the next three years. Keen to scale up, Oracle has chosen to save upfront costs, lease the land, and concentrate its spending on chip purchases instead. As of August, the company sat on $105 billion total debt, according to Bloomberg data.

AI is quickly becoming a cash game, and those with the best balance sheets naturally have better odds. Despite repeated bond sales this year, Alphabet still has negative net debt. It generates about $150 billion operating cash flow a year and has close to $100 billion in cash.

By comparison, OpenAI needs to continually raise venture capital to keep up with its expenses, SoftBank sold quality assets to invest in the unicorn, and Oracle resorted to debt-financed land purchases to get data-center construction going.

Smart money has chosen the cash cow. ©Bloomberg

The author is a Bloomberg Opinion columnist covering Asian markets.