A look at OpenAI's $40B funding and $300B valuation
While the amount investors promised shows the potential for the ChatGPT maker in the AI market, concerns about the vendor's profitability could keep it from seeing the full amount.
As the LLM wars heat up and the AI market becomes more competitive, OpenAI revealed a $40 billion fundraising effort with a $300 billion post-money valuation.
Japanese investment firm SoftBank Group leads the $40 billion investment. It also includes the participation of OpenAI's backer and partner, Microsoft, and others, including Thrive, Coatue and Altimeter.
Only $10 billion of the investment is currently secure. SoftBank will invest an additional $30 billion in the AI vendor if OpenAI can perform an organizational restructuring between now and Dec. 31.
According to OpenAI, support from SoftBank Group and other investors will help pave the way toward artificial general intelligence (AGI) to benefit humanity.
OpenAI and SoftBank are also partnering together to lead a new project called Stargate that is expected to lead to an investment of $500 billion in new AI data centers and infrastructure in the U.S.
OpenAI's potential
The extensive fundraising and valuation represent the promise investors see in AI technology and OpenAI.
OpenAI's ChatGPT large language model (LLM) sparked an explosion of generative AI technology. Sam Altman, the vendor's CEO, said ChatGPT saw a million users in its first five days. The AI chatbot now has 400 million users each week, according to OpenAI.
OpenAI represents probably one of the few companies that could potentially compete with Google to facilitate internet traffic.
David MenningerAnalyst, Information Service Group
Therefore, the $40 billion funding reflects the untapped potential that OpenAI brings to the AI market, said David Menninger, an analyst at Information Service Group.
"OpenAI represents probably one of the few companies that could potentially compete with Google to facilitate internet traffic," Menninger said. This potential might motivate the ways investors value the vendor, he said.
OpenAI's profitability
Despite that promise, there are still some questions about OpenAI's ability to be profitable and the winner or runner-up in the generative AI race -- either would justify the valuation.
"We have not seen the ROI associated with what OpenAI is delivering," said Futurum Group analyst David Nicholson. "There is nothing rational about this investment, other than doubling down on the bet that this will be very valuable someday."
The investment assumes that even with the recent wave of innovation representing DeepSeek and reasoning models, OpenAI and rival Anthropic, as well as agentic and OpenAI will emerge as the winners, he added.
However, Nicholson continued, OpenAI has yet to show a direct correlation between having more people sign up for its AI chatbot due to its new image generation feature and its new valuation of $300 billion post-funding.
"The real ticket to them being eventually profitable is demonstrating what the economic model looks like for profitability. How much does it cost them to produce the product, and how much are people willing to pay for the product?" he added. "I haven't seen anyone be able to explain that."
It's hard to explain the economic blueprint considering hardware, energy resources that go into generating tokens and the rapid development of new hardware technologies.
OpenAI also revealed that its image generation feature is now available for free users.
Esther Shittu is an Informa TechTarget news writer and podcast host covering artificial intelligence software and systems.
