OpenAI is in talks with tech giants and Middle Eastern sovereign wealth funds to raise as much as $100 billion in a new round of funding that could value the company at $750 billion or more, according to five people with knowledge of the discussions.
The situation is fluid, the people said, requesting anonymity to discuss ongoing negotiations, and $100 billion in funding is just one possibility as OpenAI holds discussions with Nvidia, Amazon, Microsoft and the Japanese conglomerate SoftBank.
OpenAI is currently valued at $500 billion, making it one of the most valuable private companies in the world, along with the rocket company SpaceX and ByteDance, the maker of TikTok. OpenAI, based in San Francisco, is considering an initial public offering as soon as this year.
But OpenAI is unprofitable and spending enormous sums to get the raw computing power it needs to build and deploy its artificial intelligence technologies. The company, which charges subscription fees for its ChatGPT chatbot and other software, reached $13 billion in revenue last year and expected to triple that this year, but plans to spend $115 billion between 2025 and 2029. And that is just a fraction of the $1.4 trillion it has committed to spending on computing power in the long term.
OpenAI closed its previous funding round in March, and the last of the $40 billion raised in that round was wired to the company at the end of last year. It has previously raised money from Nvidia, Microsoft, SoftBank and the United Arab Emirates, and the latest discussions are with many of those existing investors.
The Information and The Financial Times earlier reported some details of OpenAI’s funding discussions.
(The New York Times sued OpenAI and Microsoft in 2023 for copyright infringement of news content related to A.I. systems. The two companies have denied those claims.)
When OpenAI set off the A.I. boom with the release of ChatGPT in late 2022, it had a clear technical lead on rivals, including Anthropic and Google. OpenAI kept that lead for more than two years, but other companies in the United States and China have since built technologies that match or even exceed what OpenAI’s A.I. models can do.
That has put the company under pressure to find new ways of pulling in revenue. OpenAI recently began selling ads on the free version of ChatGPT, which is used by more than 800 million people. The chatbot is the company’s primary revenue source, with about 6 percent of ChatGPT’s users paying $20 a month to use a more powerful version of the service. OpenAI is also working to sell services to businesses in areas like health care and finance.
OpenAI has long raised money from partners that supply it with products and services. Microsoft invested $1 billion in 2019, and OpenAI agreed to purchase computing power from the tech giant. In the fall, OpenAI said it had agreed to buy computer chips from Nvidia, a deal that also included a $100 billion investment from the chip maker.
Microsoft’s close partnership with OpenAI is increasingly raising questions about whether Microsoft is taking on too much risk.
On Wednesday, Microsoft reported its quarterly earnings and disclosed it had $625 billion in commercial deals — including cloud computing and its productivity software — with customers in the coming years. Almost half of that was with one company: OpenAI. That prompted concerns from Wall Street analysts, who asked Microsoft executives whether the company was too dependent on the start-up.
“There’s obviously concern about the durability,” said Brent Thill, an analyst at Jefferies. “I think everyone is concerned about the exposure.”
Amy Hood, Microsoft’s finance chief, said that, even without OpenAI, the company had roughly $350 billion in contracts from other customers. She praised the partnership with OpenAI, saying, “We sit under one of the most successful businesses built, and we continue to feel quite good about that.”
Tripp Mickle contributed reporting.
Cade Metz is a Times reporter who writes about artificial intelligence, driverless cars, robotics, virtual reality and other emerging areas of technology.
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