OpenAI Seeks Historic $100B Funding at $750B Valuation

AI company OpenAI is in negotiations over a historic funding round totaling up to $100 billion at a valuation of $750 billion. This is currently being reported consistently by the Financial Times and The Information.

Around $40 billion of this sum is expected to come from three of its major infrastructure suppliers: Nvidia, Microsoft, and Amazon. The startup, led by Sam Altman, needs these funds for further expansion, which requires enormous amounts of expensive data center capacity.

Nvidia is considering an investment of up to $20 billion in the ChatGPT developer. Amazon has discussed a stake of at least $10 billion, while Microsoft, which already holds a 27 percent stake in OpenAI, could invest several billion dollars additionally. These amounts would be part of the new funding round, in which OpenAI is aiming for a total of $100 billion.

Concerns Over Circular Financial Structures

The extensive investments by the same tech companies that simultaneously sell OpenAI the chips and data center capacity the company needs to train and operate its AI models are intensifying concerns among some analysts about the circular financial arrangements of the loss-making startup. OpenAI trains its models on Nvidia hardware and uses cloud infrastructure from Amazon and Microsoft, while these companies are now also acting as major investors.

In addition to the three infrastructure providers, Altman is on the verge of securing another $30 billion from SoftBank for the new funding round. Japanese billionaire Masayoshi Son is thereby increasing his bet on the leading AI model developer. OpenAI is also in talks with sovereign wealth funds such as the Abu Dhabi Investment Authority and MGX. However, it remains unclear whether all potential investors will actually participate and whether the startup will reach its $100 billion goal.

Existing Business Relationships and New Agreements

Nvidia reached a multi-year agreement with OpenAI last year involving investments of $100 billion in tranches of $10 billion each, as the startup gradually brings data center capacity online. However, this deal has not yet been finalized. A $20 billion check from Nvidia for the current funding round could occur in addition to the $100 billion agreement or lead both companies to adjust the terms.

OpenAI already maintains a $38 billion, seven-year contract with Amazon for the use of AWS cloud infrastructure. The new investment could be part of a broader agreement with Amazon that gives the company access to OpenAI’s technology. Microsoft is among OpenAI’s early supporters and, following a restructuring of their relationship last year, is the largest shareholder in the AI group’s for-profit business division.