OpenAI Targets $340B Valuation In New Funding Round

As competition in the generative artificial intelligence (AI) sector heats up, OpenAI is in talks to raise up to $40 billion in a new funding round, potentially increasing the company's valuation to as much as $340 billion.

Global tech investor SoftBank Group, led by CEO Masayoshi Son, is in discussions to lead the round, with plans to contribute between $15 billion and $25 billion, CNBC reported, citing people familiar with the discussions.

The new investment could push OpenAI's valuation to $340 billion, including the new funds, and if completed, it would mark a record-breaking single funding round for a private company.

If the deal goes through, SoftBank's contribution would surpass Microsoft's as OpenAI's largest backer. The news was first reported by The Wall Street Journal.

For its upcoming funding round, SoftBank has set OpenAI's valuation at $260 billion, a sharp increase from $150 billion just a few months ago. The funding will likely come in the form of convertible notes, similar to OpenAI's previous funding round. The deal, however, is contingent on OpenAI restructuring its business to remove control from its non-profit arm.

Since the launch of its ChatGPT chatbot in 2022, OpenAI has sparked a surge in generative AI technology and was most recently valued at $157 billion. Last October, OpenAI raised $6.6 billion to position itself more competitively against rivals such as Elon Musk's xAI, Microsoft, and Google.

Leading this funding round would be a significant step for SoftBank, as the group has around $30 billion in cash ready for investment, according to filings.

The funds raised in this round may also support OpenAI's involvement in Stargate, a joint venture with SoftBank and Oracle. Announced last week by President Donald Trump, OpenAI and SoftBank aim to invest up to $500 billion to help the U.S. maintain its lead over China in AI infrastructure.

SoftBank's investment would be in addition to the $15 billion it has already committed to the Stargate project. However, discussions regarding the funding round are still in the early stages.

As competition heats up, major tech companies are ramping up their own AI investments. In recent earnings calls, the CEOs of Microsoft and Meta Platforms defended their substantial AI spending, arguing it is essential for staying competitive.

Microsoft has allocated $80 billion for AI in its current fiscal year, while Meta has committed up to $65 billion.

DeepSeek: A Growing Rival

A new and growing challenger for the AI sector is DeepSeek, a Chinese startup that has been gaining traction in the U.S. market. DeepSeek's AI model has been trained at a fraction of the cost of its American counterparts, making it a significant competitor and putting more pressure on OpenAI.

The startup's DeepSeek-V3 model required less than $6 million in computing power from Nvidia H800 chips. By using a technique called model distillation, DeepSeek has built on frontier AI models, including those from OpenAI, raising concerns about whether labs like OpenAI can maintain their edge in a landscape of lower-cost competitors.

Earlier this week, DeepSeek's app soared to the top of the Apple App Store rankings, underscoring its growing influence.

During an event in Washington, D.C., on Thursday, OpenAI CEO Sam Altman acknowledged DeepSeek's rising influence, calling its AI model "clearly a great model."

"This is a reminder of the level of competition and the need for democratic Al to win," Altman said. He also emphasized the "level of interest in reasoning, the level of interest in open source."