OpenAI Nears Historic $100 Billion Fundraise, Targeting $830 Billion Valuation

OpenAI is in talks to raise up to $100 billion. The Wall Street Journal reported this on Thursday. The deal could value the ChatGPT maker at up to $830 billion.

This would be one of the largest private fundraises in history. It signals massive investor confidence in artificial intelligence. The company aims to close the round by the end of March next year.

Massive Cash Injection to Fuel AI Race

The funding target is staggering. According to The Wall Street Journal, sovereign wealth funds may be asked to participate. This new capital would come as OpenAI commits to spending trillions on AI development.

The company’s compute costs are enormous. Much of the spending is for “inferencing,” or running its AI models. This appears to be funded more by cash than cloud credits now.

OpenAI’s annual revenue run-rate is reportedly about $20 billion. Yet its ambitions are even larger. This fundraise would add to a war chest already exceeding $64 billion.

Pressure Mounts in a Competitive and Costly Landscape

The AI sector is fiercely competitive. Rivals like Anthropic and Google are advancing quickly. OpenAI must spend heavily to maintain its lead.

Broader market sentiment has recently cooled. Investors question if the current pace of debt-fueled investment is sustainable. Supply constraints for critical memory chips also pose a threat.

Rumors suggest OpenAI is also courting Amazon for a separate $10 billion investment. An IPO has also been discussed as a future possibility. The company’s most recent secondary valuation was around $500 billion.

This potential $100 billion funding round underscores the astronomical stakes in the global AI race. If successful, it would provide OpenAI with unmatched resources to shape the future of technology.

Thought you’d like to know

What is OpenAI’s current valuation?

OpenAI is currently valued at about $500 billion based on recent secondary transactions. The new funding round could push its valuation to between $750 and $830 billion.

When is the $100 billion funding round expected to close?

The company aims to finalize the massive fundraise by the end of the first quarter next year. That means the target is late March 2025.

Why does OpenAI need so much money?

The costs of developing and running advanced AI are immense. Major expenses include computing power for training models and “inferencing,” which is the process of generating answers for users like in ChatGPT.

Who might invest in this round?

Reports indicate OpenAI may ask sovereign wealth funds to participate. Other large institutional investors and tech giants like Amazon have also been rumored as potential backers.

How does this affect the AI industry?

This fundraise sets a new benchmark for private market investment. It increases competitive pressure on rivals and highlights the vast capital required to lead in generative AI.