OpenAI Aims for a $150 Billion Valuation

Can Sam Altman, the C.E.O. of OpenAI, pull off another mega funding round?Credit…Haiyun Jiang for The New York Times

Is the sky the limit for OpenAI investors?

What a difference a few days make. OpenAI is now in talks to raise about $6.5 billion at a valuation of around $150 billion, The Times reports. Those numbers vastly exceed what ChatGPT’s parent company had been seeking not too long ago.

If the round comes together — talks remain fluid, and there’s no guarantee they will lead to a deal at those terms — it would underscore investors’ continued enthusiasm for artificial intelligence, even as questions about the future of the sector are piling up.

Only last week, OpenAI was seeking about $1 billion at a $100 billion valuation. But belief that the company will continue to lead the A.I. race appears to be driving current and prospective investors — potential participants in the round include Josh Kushner’s Thrive Capital, Microsoft, Apple and Nvidia — to open their wallets. (OpenAI is also in talks to secure a $5 billion revolving line of credit from banks, according to Bloomberg.)

To put the fund-raising effort in context:

• At $150 billion, the company would also be nearly twice as valuable as Intel.

• At $6.5 billion, the deal size would be tied for the fifth biggest venture funding round since 2006, according to PitchBook.

• A $150 billion valuation would be a huge win for Thrive, which led OpenAI’s last major fund-raising round at an $80 billion valuation.

• At that size, questions will grow about the company plans to go public via an initial public offering and add to pressure for it to restructure itself into an entirely for-profit enterprise.

OpenAI certainly needs the money. By some estimates, it’s burning through $7 billion a year to fund research and new A.I. services and hire more employees. It’s expected to introduce more products soon, including a tool that adopts a different reasoning approach than existing chatbots like ChatGPT.

And OpenAI is racing against other tech giants, including Microsoft (which has already invested $13 billion in the start-up) to innovate — and buy up expensive hardware to do it. (Jensen Huang, the C.E.O. of the chipmaker Nvidia, said on Wednesday that demand was so great for his company’s processors that relations with partners were getting tense.)

But the A.I. business is facing headwinds, raising concerns about overheated valuations. While indexes tracking the so-called Magnificent Seven leaders in A.I. are up sharply year-to-date, they’re down from their July highs amid investor worries about the cost of the arms race.