OpenAI is nearing a funding round of up to $30 billion at a valuation of $1.25 trillion, led by investors from the United Arab Emirates and Coatue, according to people familiar with the deal. The financing is being structured as an opportunistic bridge ahead of a potential initial public offering, with the company having confidentially filed its prospectus with the SEC in June.
The San Francisco-based AI company is raising capital in a round that values it at $1.25 trillion excluding the new funds, sources told CNBC. Discussions began after investors approached OpenAI in September. The company is aiming to secure signatures by the end of next week, though the final size remains uncertain.
Alongside the investment, OpenAI is negotiating a commercial deal to secure additional computing capacity from the UAE. The company has told investors it targets roughly $600 billion in total compute spend by 2030.
OpenAI's IPO timing remains unclear. CFO Sarah Friar told employees in August that the AI lab "will be a public company in 2027." The following month, CEO Sam Altman said that "right now would be an ill-advised moment to go public."
Meanwhile, rival Anthropic is also preparing for an IPO. The company confidentially filed with regulators in June and is seeking a valuation between $1.5 trillion and $2 trillion. In May, Anthropic closed a $65 billion funding round at a $965 billion valuation.
Analysis
Why This Matters
- The funding round would be one of the largest ever for a private company, reflecting sustained investor appetite for AI despite broader market uncertainty.
- OpenAI's potential IPO, expected as early as 2027, could reshape public markets and set a benchmark for AI company valuations.
- The involvement of UAE investors signals deepening ties between Gulf states and leading AI firms, with implications for global compute infrastructure and geopolitics.
Background
OpenAI has grown rapidly since launching ChatGPT in 2022, becoming a central player in the AI boom. The company has raised tens of billions from investors including Microsoft, though Microsoft's role in this round is not specified. OpenAI's shift from a nonprofit to a for-profit structure has paved the way for a public listing. The company faces intense competition from Anthropic, Google, and others, while grappling with high compute costs. Its ambitious infrastructure plans, including a target of $600 billion in compute spending by 2030, underscore the capital-intensive nature of frontier AI development.
Key Perspectives
OpenAI leadership: The company sees the funding as a strategic move to secure capital and compute capacity ahead of an IPO, while managing investor expectations about timing.
UAE investors: By leading the round, the UAE positions itself as a key backer of cutting-edge AI, gaining influence over compute infrastructure and access to technology.
Anthropic: As OpenAI's chief rival, Anthropic is also pursuing a massive IPO, creating a competitive dynamic where both companies jockey for investor mindshare and valuation supremacy.
Market observers: Some may question whether valuations in the trillions are justified given the unproven profitability of generative AI and the massive capital expenditures required.
What to Watch
- Whether OpenAI meets its target of signing the round by the end of next week and the final size of the investment.
- Any updates on the commercial compute deal with the UAE and the broader infrastructure spending trajectory.
- The IPO timeline: whether OpenAI moves forward in 2027 or delays, and how Anthropic's IPO plans affect the market.
- Regulatory scrutiny of large foreign investments in AI, particularly from Gulf states.