OpenAI, the company behind ChatGPT, is in negotiations to secure up to $100 billion in new funding, potentially valuing the artificial intelligence firm at $830 billion. The Wall Street Journal first reported the talks on Thursday, citing sources familiar with the matter.
Funding Details and Timeline
The company plans to complete the funding round by the end of the first quarter of next year. Discussions include potential investments from sovereign wealth funds, indicating the scale and ambition of this raise. This follows earlier reports from The Information, which suggested a $750 billion valuation.
Strategic Implications: Spending and Competition
This funding comes as OpenAI commits to massive investment in AI development, estimated to require trillions of dollars. The capital will likely fuel increased spending on inferencing, the process of deploying AI models, which now appears to exceed the limits of existing cloud credit partnerships. OpenAI faces growing competition from rivals like Anthropic and Google, forcing the company to accelerate model releases and expand its developer tools.
Investor Sentiment and Supply Chain Concerns
The move occurs amid a slight cooling of investor sentiment toward AI. Doubts are rising about whether the current pace of heavily debt-fueled investment by tech giants can be sustained. Moreover, the shortage of memory chips is a serious bottleneck in the broader tech sector, threatening to constrain AI hardware production.
Alternative Funding Strategies
OpenAI is also exploring an initial public offering (IPO) to raise tens of billions and fund development. The company is reportedly in talks with Amazon for a $10 billion investment, which would also give OpenAI access to Amazon’s next-generation AI chips. Current revenue estimates put OpenAI at approximately $20 billion per year.
Financial Position
OpenAI currently holds more than $64 billion in funding, according to PitchBook. The last secondary transaction valued the company at around $500 billion. The company did not respond to requests for comment.
This funding round highlights OpenAI’s position as a leader in the AI race and its aggressive growth strategy. Securing this capital will be critical for sustaining its competitive edge as the AI landscape intensifies.
