OpenAI valued at $157 billion after securing $6.6 billion in latest funding round

10/03/2024 02:00
OpenAI valued at $157 billion after securing $6.6 billion in latest funding round

OpenAI valued at $157 billion after securing $6.6 billion in latest funding round OpenAI valued at $157 billion after securing $6.6 billion in latest funding round 48 seconds ago · 2 min read

Thrive Capital led the funding round, which included key backers such as Microsoft, Nvidia, SoftBank, and others.

2 min read

Updated: Oct. 2, 2024 at 7:56 pm UTC

OpenAI valued at $157 billion after securing $6.6 billion in latest funding round

Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.

Receive, Manage & Grow Your Crypto Investments With Brighty

OpenAI has concluded its latest funding round, raising $6.6 billion at a post-money valuation of $157 billion, according to an Oct. 2 blog post.

The capital influx is expected to bolster OpenAI’s capacity to advance its AI research, scale up computing infrastructure, and continue developing solutions to address complex challenges.

OpenAI said:

“The new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems.”

Sources familiar with the deal told CNBC and Bloomberg News that Thrive Capital led the funding round, which included key backers such as Microsoft, Nvidia, SoftBank, and others.

Skyrocketing valuation

OpenAI’s valuation has skyrocketed in recent years, growing from $29 billion in 2023 to $80 billion earlier in 2024. This reflects its dominant position in AI and the industry’s appetite to fund expensive research in the technology.

The surge in OpenAI’s growth was largely driven by the widespread adoption of ChatGPT, which now boasts 250 million weekly active users, including 11 million ChatGPT Plus subscribers and 1 million paying business users.

Revenue growth has followed suit, with OpenAI projecting $11.6 billion in sales for 2025, compared to $3.7 billion anticipated for 2024. However, the company expects to post a $5 billion loss this year due to the high cost of research.

Challenges

Despite its rapid growth and skyrocketing valuation, OpenAI faces considerable financial challenges that threaten its long-term sustainability. One of the main hurdles is the immense operational costs associated with running its large language models, which rely heavily on Nvidia’s high-end graphics processing units (GPUs).

These GPUs are crucial for training and running AI models but come with a hefty price tag, contributing to OpenAI’s projected $5 billion loss this year. While the company’s revenue has surged — expected to reach $11.6 billion by 2025, up from $3.7 billion in 2024 — it continues to operate at a significant loss.

This revenue-expenditure imbalance presents a challenge as OpenAI invests heavily in expanding its AI research and infrastructure. Additionally, the company’s reliance on substantial investor funding, with contributions from major backers like Microsoft and Nvidia, raises concerns about long-term financial stability.

Internal transitions have also marked OpenAI’s recent journey. The company recently announced the departure of key executives, including CTO Mira Murati and research chief Bob McGrew.

Mentioned in this article
Latest Press Releases

Read more --->