OpenAI has held preliminary discussions about a funding round that could see it raise as much as $100 billion at valuation of around $750 billion, according to a report by the Information on Wednesday. The potential deal would mark one of the largest capital raises in the startup’s history and underscore the artificial intelligence (AI) sector's unrelenting appetite for computing power and capital as companies race to build advanced systems.
AI Generated Image
The valuation would represent a 50% increase from OpenAI's $500 billion valuation in October, when current and former employees sold about $6.6 billion worth of shares. The talks are at an early stage and details could still change, the Information reported, citing three people with knowledge of the discussions. OpenAI declined to comment on the report.
The potential fundraise would add to OpenAI's already substantial cash stockpile, needed to train and run its AI models as the company projects it will burn about $26 billion this year and next, enroute to more than $100 billion in cash burn over the next four years, according to the Information. By last month, OpenAI was reportedly generating $19 billion in annualized revenue and is on track to hit its goal of $20 billion by year-end.
For a round of that size, OpenAI would likely need to tap a mix of strategic investors and sovereign wealth funds. The company has already raised more than $60 billion from investors including Thrive Capital, SoftBank, the United Arab Emirates' MGX, and chip giant Nvidia, according to the Information.
Amazon in Talks to Invest Over $10 Billion
On the same day, Bloomberg and the Information reported separately that Amazon.com Inc. is in early discussions to invest at least $10 billion in OpenAI at a valuatioin north of $500 billion. The deal under discussion would see OpenAI adopt Amazon's Trainium chip, people familiar with the matter told Bloomberg.
The negotiations between OpenAI and Amazon began around October after the ChatGPT creator completed its corporate restructuring, which converted its equity to traditional stock and granted it more freedom to strike deals with investors other than Microsoft, which owns about 27% of OpenAI equity, the Information reported. Talks are at a preliminary stage and terms could change, according to both reports.
The Amazon investment would help OpenAI afford some of its commitments to rent servers from cloud providers, the Information reported. OpenAI last month announced it would spend $38 billion renting servers from Amazon Web Services over the next seven years, making AWS one of at least five cloud providers it uses. As part of the deal being discussed, OpenAI plans to use Trainium chips, per the Information’s sources.
Circular Deals and Strategic Positioning
An Amazon deal would mark the latest in a series of circular transactions in the AI space, where major hardware manufacturers and cloud providers invest in young AI companies that commit to using their data centers and chips for training AI models. This past March, OpenAI invested $350 million of equity into CoreWeave, which used the funds to buy chips from its backer Nvidia, according to media reports.
For Amazon, an OpenAI deal would mirror the activities of Microsoft, its fiercest cloud-services rival, the Information reported. Amazon made a relatively early bet on Anthropic, investing $8 billion in the company and agreeing to help sell its AI to cloud customers. But as Anthropic has done more business with Microsoft and Google, Amazon has gotten closer with OpenAI, culminating in the cloud deal last month, the Information reported.
Revenue Growth Amid Heavy Spending
OpenAI is on track to beat its 2025 total revenue goal of $13 billion, up from around $40 billion last year, according to one person cited by the Information. That figure should rise to $30 billion next year and around $200 billion by 2030 on increased sales of ChatGPT subscriptions and new products, which could include advertising, the Information reported.
The discussions with potential investors mark a new high water mark for private investments in high-tech startups, the Information noted. Elon Musk's SpaceX recently arranged a share sale that valued the rocket launch company at $800 billion, while Alphabet Inc.’s autonomous driving unit Waymo is discussing raising billions of dollars at a valuation of more than $100 billion.
Amazon and OpenAI representatives declined to comment on the reports.
