OpenAI reportedly finalizing $100B deal at more than $850B valuation

OpenAI nears massive $100 billion funding round

OpenAI is in advanced talks to raise more than $100 billion in a funding round that would value the company above $850 billion, according to a Bloomberg report. The deal would solidify the ChatGPT-maker's status as one of the world's most valuable private companies.

The funding comes as OpenAI continues to burn cash while working toward profitability. The company recently began testing ads within ChatGPT for its free users, a move aimed at generating new revenue streams.

Investors bet big on AI future

Investors are apparently willing to overlook the financial risks, valuing the company $20 billion higher than an initially projected $830 billion figure. According to Bloomberg's source, the company's pre-money valuation will remain at $730 billion.

The staggering valuation reflects immense confidence in OpenAI's technology and its central role in the artificial intelligence boom. It also highlights the enormous capital requirements for training and running advanced AI models.

Major tech giants lead the round

The first portions of this colossal funding round are reportedly coming from a who's who of the tech and investment world. The lead investors include:

• Amazon, which is already in talks to invest up to $50 billion
• SoftBank, which is gearing up to commit $30 billion
• Nvidia, the AI chipmaker, close to investing $20 billion
• Microsoft, OpenAI's existing major partner and investor

Venture capital firms and sovereign wealth funds are expected to participate in later tranches, which could push the total amount raised even higher.

The path to profitability remains unclear

OpenAI's foray into advertising is a direct attempt to monetize its massive user base and offset the immense costs of running its services. The company charges for its premium ChatGPT Plus tier and sells API access to developers, but these revenue streams have not yet made the company profitable.

The introduction of ads is a significant gamble. While it could unlock a major new revenue source, it also risks alienating free users accustomed to an ad-free experience.

OpenAI did not immediately respond to a request for comment on the funding report. The company's ability to attract such a monumental investment underscores the feverish market sentiment around generative AI, even as its business model continues to evolve.