OpenAI Reportedly Seeks $100B at $830B Valuation

OpenAI is reportedly in discussions to raise as much as $100 billion in a funding round that could value the ChatGPT maker at up to $830 billion, a sharp increase from earlier estimates that would place it among the world’s most valuable private tech firms, according to The Wall Street Journal, which cited anonymous sources on Thursday. 

According to the source, WSJ, the company plans to raise the money by the end of the first quarter of the next year, and it may invite sovereign wealth funds to participate in the round. The deal was first revealed by The Information, but it stated that OpenAI would be valued at $750 billion as a result of the fundraising.

In an effort to maintain its lead in the race to create AI technology, OpenAI has committed to spending trillions of dollars and has made deals all across the world. The company’s inferencing expenditures, which appear to be financed more by cash than cloud credits and indicate that the company’s compute costs have increased beyond what partnerships and credits can cover, would also benefit from the cash infusion.

Additionally, OpenAI has had to step up to release new models and increase its footprint in the developer and tools community as competition from rivals like Anthropic and Google heats up.

As investors begin to question whether the rate of debt-fuelled investment by industry titans like Amazon, Microsoft, Oracle, and OpenAI itself can be sustained over time, general sentiment on AI has recently cooled. The fact that there is a scarcity of memory chips, which could have an impact on the entire computer industry, further hinders chip manufacture.

Reports suggest OpenAI may pursue an IPO to raise tens of billions of dollars to support its rapidly growing development efforts, currently estimated to generate about $20 billion in annual run-rate revenue. The company is also rumoured to be seeking a $10 billion investment from Amazon that would include access to the tech giant’s latest AI computing chips.

According to PitchBook data, OpenAI now has more than $64 billion in its coffers; if the fundraising is successful, it would add a significant sum. In a secondary sale, the business was most recently valued at roughly $500 billion.

When asked for comment, OpenAI did not immediately respond.

In light of a general decline in interest in certain AI-related investments in public markets, the fundraising initiative is viewed as a crucial test of investor appetite in the AI field. The continuous investment is essential because the corporation is expected to spend over $200 billion in cash through 2030 to fulfil its expansion ambitions.

CEO Sam Altman said that the annual revenue is “well more” than $13 billion, and by 2027, estimates might exceed $100 billion. Some question whether the high valuations are indicative of a market bubble because the company is not yet profitable because to the enormous costs associated with inference and training.

Although direct stock purchases are not feasible for those who are interested in investing, exposure can be obtained indirectly through publicly traded firms such as Microsoft, a significant sponsor, or AI-focused exchange-traded funds.