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OpenAI has closed a blockbuster funding round that could raise up to $110bn and value the ChatGPT maker at $730bn, as the AI start-up tries to claw back its lead from rivals Anthropic and Google.
Nvidia, Amazon, and SoftBank all participated in the fundraising. The deal is a step toward an IPO by the end of this year, according to people with knowledge of its plans.
Friday’s funding round dwarfs the $30 billion deal Anthropic secured this year and a $41 billion investment in OpenAI in 2025 — the largest start-up investment at the time. This provides further evidence of investors’ appetite to fund loss-making AI groups despite growing concerns about a bubble in the sector.
The majority of OpenAI’s new funding will come from strategic investors rather than venture capital firms.
Nvidia and SoftBank have pledged $30 billion to be paid in three tranches. Amazon will invest $15 billion initially and $35 billion when OpenAI goes public or manages to create a more powerful AI called “artificial general intelligence.”
Amazon’s investment is part of a broader strategic partnership between the companies announced on Friday, under which OpenAI will spend $100 billion over the next eight years on top of the big tech group’s existing $38 billion contract on computing power and chips. The pair will also develop a custom AI model for Amazon’s consumer products.
Microsoft, OpenAI’s largest single shareholder, did not participate in the funding round. OpenAI said its deal with Amazon would not affect Microsoft’s “exclusive licenses and access to the intellectual property in OpenAI models and products.”
$10 billion or more in primary equities are expected to come in from sovereign wealth funds and investment firms, with commitments coming next month, according to a person with knowledge of the matter.
The new capital adds to the approximately $40 billion currently on OpenAI’s balance sheet, setting the company up for a period of sustained losses through 2030, when executives project to become free cash flow positive for the first time.
Most of the capital raised by OpenAI will be reinvested in running data centers and purchasing chips and cloud services from Big Tech companies participating in the round.
The OpenAI Foundation, which spun off from the company last year, will also sell its $180 billion stake in the for-profit business in the secondary market if there is more demand from investors, according to a person familiar with the plans. He said it could sell up to $10 billion of stock to fund hiring and grant-making activities.
The Sam Altman-led start-up was last valued at $500bn in October last year as part of an employee stock sale.
OpenAI is in competition with Google and xAI to develop AI tools for consumers and is also focusing on building AI systems for businesses, an area where Anthropic has established an early lead.
According to a senior executive, the group expects half its revenue to be generated from ventures by the end of this year, up from about 40 per cent today.
OpenAI’s revenue was about $13 billion last year and is projected to reach $30 billion this year before rising to more than $60 billion in 2027, according to a person with knowledge of the group’s finances.
This forecasting depends on securing computing power to train and run its models. In a flurry of deals last year, OpenAI committed to buying about $1.4tn of computing power over eight years.
Those plans have been cut after a proposed long-term deal with Nvidia, which would have seen the chip maker invest $100 billion in OpenAI, which would in turn buy millions of AI processors, was abandoned.
OpenAI’s purchase commitments through 2030 now total about $600bn, according to a person with direct knowledge of the deal.
