OpenAI announced a $110 billion funding round on Friday, more than double its previous raise a year ago and a record for a private technology company.
Amazon Investing $50 billion, Nvidia Investing $30 billion, Softbank OpenAI said in a release Friday that it invested $30 billion in the round. The investment boosts OpenAI’s pre-money valuation to $730 billion, a significant increase from its $500 billion valuation in October’s secondary financing. OpenAI says other investors will join as the round progresses.
“We’re very excited about this deal,” OpenAI CEO Sam Altman told CNBC’s “Squawk Box” on Friday. “AI will be everywhere. AI is transforming entire economies, and the world will need massive amounts of collective computing power to meet demand.”
In addition to participating in the funding round, Amazon announced a multi-year strategic partnership with OpenAI. As part of the agreement, the companies will develop customized models to help power Amazon’s customer applications, according to the release.
OpenAI announced it will expand its existing $38 billion contract with Amazon Web Services by $100 billion over the next eight years. AWS will also serve as the exclusive third-party cloud distribution provider for Frontier, OpenAI’s enterprise platform, announced earlier this month.
Amazon’s $50 billion investment in OpenAI will start with an initial commitment of $15 billion, with an additional $35 billion to be added “in the coming months if certain conditions are met,” the companies said.
“We’re in the very early stages of the AI space right now, and OpenAI is off to a great start,” Amazon CEO Andy Jassy said on Friday’s “Squawk Box.” “We believe they’re going to be one of the very big winners in the long term. We think we can help them quite a bit as part of this partnership.”
OpenAI said Friday that its announcement does not “change in any way the terms” of its partnership with the company. microsoftThe companies said in a joint statement that the partnership remains “strong and central.”
Microsoft still has the option to participate in OpenAI’s funding round, said a person familiar with the matter who asked not to be identified because discussions are confidential.
In the more than three years since ChatPGT launched, OpenAI has reshaped the technology industry and defined the era of generative artificial intelligence. But to achieve its ambitions, the company must continue to generate cash, especially in paying for graphics processing units (GPUs) and other infrastructure.
As part of Friday’s announcement, OpenAI said it will expand its long-standing collaboration with Nvidia, which dominates the GPU market. OpenAI will use 3 gigawatts of dedicated inference power and 2 gigawatts of training capacity on Nvidia’s Vera Rubin systems, the company said.
CNBC first reported last week that OpenAI has told investors it aims to bring total computing spending to about $600 billion by 2030, months after CEO Sam Altman touted a $1.4 trillion infrastructure investment.
The company is offering lower numbers and a clearer timeline for its planned spending amid widespread concerns that its expansion ambitions are too large for the subsequent revenue potential, people told CNBC.
OpenAI continues to lead the consumer AI market, but faces increasing competition from the United States. Google Gemini is looking to beef up its offerings for the enterprise market, where rival Anthropic has an early lead.
OpenAI projects total revenue of more than $280 billion in 2030, with roughly equal contributions from its consumer and enterprise businesses, said the people, who requested anonymity because the information is private.
OpenAI’s latest round marks the largest private financing in history and a new high-water mark for valuations of late-stage tech companies. OpenAI first broke records last year with $40 billion in funding led by SoftBank. Rival Anthropic had the next highest total, raising $30 billion in its latest round, and xAI last raised $20 billion.
–CNBC’s Jordan Nobe contributed to this report
