OpenAI, the startup behind the artificial intelligence portal known as ChatGPT, is about to get a massive cash infusion that will pump its valuation beyond $100 billion.
What Happened: Venture capital firm Thrive Capital is leading a fundraising effort and will invest at least $1 billion, according to the Wall Street Journal.
Microsoft Corp (NASDAQ:MSFT), an original OpenAI investor, is also expected to participate in the round. It remains to be seen what other backers, if any, are joining the campaign.
See Also: Nvidia Q2 Earnings, Guidance Top Street View As AI Fuels Record Data Center Revenue: Gross Margin Falls Quarter-Over-Quarter, Stock Drops
In 2023, OpenAI was valued at $86 billion.
Why It Matters: OpenAI’s ChatGPT product boasts hundreds of millions of monthly users.
While technically a nonprofit, OpenAI charges its users depending on which GPT tier they use. The GPT-3.5 and the GPT-4o models are free with a registered account. The Plus version, which grants access to GPT-4, costs $20 per month.
The company’s offerings have helped it maintain an edge over big-name rivals, including Alphabet Inc (NASDAQ:GOOG)(NASDAQ:GOOGL). The Google parent company dumped a $6-billion cash load into Anthropic, an Amazon.com Inc (NASDAQ:AMZN)-backed competitor launched by former OpenAI executives.
Meta Platforms Inc (NASDAQ:META) is also hustling to build its own AI model. The company will likely integrate the tech into Facebook and Instagram.
OpenAI, meanwhile, is working with Apple Inc (NASDAQ:AAPL) to power new AI features for the next generation of iPhones.
What’s Next: Expect the company to continue wrestling with lawsuits. Last month, the Center for Investigative Reporting sued the AI innovator and Microsoft, citing unauthorized use of its content.
Earlier this week, OpenAI insisted that it makes fair use of copyrighted content to teach its language models to create original material.
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