OpenAI has successfully completed a significant deal, valuing the artificial intelligence company at an incredible $500 billion. This information comes from two individuals closely familiar with the agreement.
This groundbreaking agreement officially crowns OpenAI as the globe’s most valuable privately held company, according to data from the start-up tracking firm CB Insights. In doing so, it has overtaken SpaceX, the innovative rocket company founded by Elon Musk.
Under the terms of the deal, current and former OpenAI employees agreed to sell shares worth approximately $6.6 billion to a consortium of investors. These investors include the prominent Japanese conglomerate SoftBank and the dynamic venture capital firm Thrive Capital. Those who shared this insight requested anonymity, as they were not authorized to discuss the details publicly.
The initial report of this monumental development was made by Bloomberg.
OpenAI’s valuation has seen a remarkable surge over the past year. It soared from $157 billion last October to an impressive $300 billion by March. The rapidly growing start-up has secured billions in funding from major investors such as Microsoft, the leading chipmaker Nvidia, SoftBank, and Thrive, all to further its mission of developing cutting-edge AI technologies, including its renowned online chatbot, ChatGPT.
In March, OpenAI had already struck an agreement with SoftBank and other investors for a funding round aiming to raise $40 billion before the year’s end. However, SoftBank reserves the right to reduce its committed funds if OpenAI fails to complete a complex corporate restructuring that has been in the works since last year.
Adding to the corporate drama, Elon Musk, who played a role in founding OpenAI before his departure in 2018 following a dispute over control, has filed a lawsuit against OpenAI and its chief executive, Sam Altman. This legal action seeks to prevent the aforementioned restructuring from proceeding.
More recently, Nvidia announced its intention to invest a staggering $100 billion in OpenAI over the coming years. Nvidia has already made an initial investment of $10 billion, based on OpenAI’s current $500 billion valuation, as confirmed by a source familiar with the agreement. This substantial investment grants Nvidia approximately a 2 percent stake in OpenAI.
Nvidia’s investment highlights a trend where OpenAI secures funding from companies crucial to its operations and services. Microsoft, for instance, poured over $13 billion into OpenAI between 2019 and 2023. This substantial investment proved lucrative for Microsoft, as the AI start-up, in turn, paid the tech giant billions for the immense computing power required to develop and deploy advanced technologies like ChatGPT.
Separately, it’s worth noting that The New York Times initiated legal action against OpenAI and Microsoft in 2023, alleging copyright infringement concerning news content used to train their AI systems. Both companies have consistently denied these allegations.