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OpenAI said on Friday it is raising $110bn in a blockbuster funding round that would value the ChatGPT maker at $840bn, in a deal that signals the feverish pace of investment in artificial intelligence.
It’s more than double the amount the company raised last year, when it racked up $40bn in the largest private tech deal on record.
This year’s funding round, which is still open, includes a $30bn investment from SoftBank, $30bn from Nvidia, and $50bn from Amazon, and comes ahead of the AI startup’s expected mega-IPO later this year. Even more investors are expected to join.
“We’re super excited about this deal,” OpenAI CEO Sam Altman told CNBC on Friday. “AI is going to happen everywhere. It’s transforming the whole economy, and the world needs a lot of collective computing power to meet the demand.”
Big tech executives have signaled to their investors in recent weeks that they are doubling down on investing in AI, despite fears that the AI boom could come with heavy costs.
AI’s expansion is dependent on the creation of massive datacenters, which are facing scrutiny by lawmakers and communities for driving up energy prices and draining water supplies. There are also fears of AI driving up unemployment, as companies try to replace workers with automated processes.
On Thursday, fintech company Block announced that it would be laying off 4,000 of its 10,000 employees because of gains in AI productivity. That dramatic reduction in workforce appears to be part of a broader trend, as Goldman Sachs noted in February that AI resulted in 5,000 to 10,000 monthly net job losses last year.
Big tech companies and large tech investors such as SoftBank are racing to forge partnerships with OpenAI – which is spending heavily on datacenters – betting that closer ties with the company would give them a competitive edge in the AI race.
“We are entering a new phase where frontier AI moves from research into daily use at global scale,” OpenAI said in a company blog post on Friday. “Leadership will be defined by who can scale infrastructure fast enough to meet demand, and turn that capacity into products people rely on.
ChatGPT now has more than 900 million weekly active users and more than 50 million consumer subscribers. OpenAI also highlighted the power of its products like Codex, its cloud-based software engineering agent that’s available to paid ChatGPT subscribers – describing its output as equivalent to a “top engineer”. “Weekly Codex users have more than tripled since the start of the year to 1.6M,” the company wrote. “More people are now creating, automating, and shipping software that once required a full engineering team.”
Amazon will start with an initial $15bn investment, followed by another $35bn in the coming months “when certain conditions are met”, OpenAI wrote, without elaborating on what they were.
Along with the investment, OpenAI and Amazon have also struck a deal, in which OpenAI will utilize two gigawatts of computing capacity powered by Amazon’s in-house Trainium chips, the companies said. “This agreement lowers the cost and improves the efficiency of producing intelligence at scale,” OpenAI said in a statement on Friday.
Amazon’s cloud computing platform, AWS, will also be the exclusive third-party cloud provider for OpenAI Frontier, the ChatGPT maker’s enterprise platform for building, deploying and managing AI agents.
The partnership does not change OpenAI’s existing relationship with Microsoft. Microsoft Azure still remains the exclusive cloud provider for OpenAI’s APIs that provide access to OpenAI’s models, the companies said.
OpenAI’s first party products will continue to be hosted on Azure, and Microsoft holds its exclusive license and access to intellectual property across OpenAI models and products.
It was not immediately clear whether Nvidia’s $30bn investment replaced its earlier commitment announced in September under which Nvidia would invest up to $100bn in the startup.
OpenAI said in its statement that this expansion would strengthen its ability to “train and deploy frontier models at global scale”. Nvidia CEO Jensen Huang affirmed his commitment to working with OpenAI in January in response to reports of tension between the two companies.
