OpenAI’s Latest Funding Lures 3 Most Valuable Tech Companies

The funding would boost OpenAI, one of the world’s most valuable venture-backed startups.

3 minutes of reading Last update: 01.09.2024 | 21:05 IST

Authors: Mark Gurman, Dina Bass, Katie Roof and Ed Ludlowa

OpenAI’s latest funding round has attracted interest from three of the most valuable tech companies, underscoring just how important the AI startup is to the industry as a whole.

Nvidia Corp, the world’s largest chipmaker, was considering joining the funding round that would value OpenAI at more than $100 billion, people familiar with the matter said. Apple Inc and Microsoft Corp were also in talks to participate in the funding, said the people, who asked not to be identified because the deliberations are private.

The proposed round will be led by Thrive Capital, which will invest about $1 billion, Bloomberg reported earlier this week. Nvidia had discussed investing about $100 million, two of the people said.

If the talks go forward, it would mean three of the biggest names in tech are backing OpenAI, the creator of the groundbreaking chatbot ChatGPT. Each company has grown dependent on the startup in recent years. Microsoft is already OpenAI’s biggest backer, investing about $13 billion. Apple, a latecomer to AI, is leaning on OpenAI to help weave AI into an upcoming version of the iPhone operating system. And Nvidia will grow with the popularity of the tools it powers.

Representatives for Nvidia, Apple, Microsoft, OpenAI and Thrive declined to comment.

Big Tech’s influence on AI is coming under increasing scrutiny, with regulators in both the EU and the US raising concerns about Nvidia’s dominance of AI chips and Microsoft’s close relationship with OpenAI. Microsoft has tightly integrated OpenAI services into its Windows and Copilot AI platforms — betting those capabilities will help drive growth.

Apple also has existing ties to OpenAI. The iPhone maker is adding ChatGPT to its new AI feature set, called Apple Intelligence. The company was also set to take a board observer seat at OpenAI — alongside Microsoft — but those plans were scrapped in July.

Nvidia, meanwhile, provides critical infrastructure needed to develop and run AI tools like ChatGPT. It’s the largest maker of so-called AI accelerators, sales of which have skyrocketed in the past two years.

Nvidia’s latest quarterly report, released Wednesday, saw revenue more than double to $30 billion. It had forecast even stronger sales for the current quarter, beating analysts’ average estimates, though investors have become so accustomed to the hurricane-like results that shares have continued to fall.

OpenAI Chief Financial Officer Sarah Friar told employees in a memo Wednesday that the company is seeking new capital, without providing details, according to people familiar with the matter. The company has been in talks to raise funding at a valuation of $100 billion or more since at least December, Bloomberg reported.

The funding would bolster one of the most valuable venture-backed startups. ChatGPT’s runaway success has also sparked an arms race among tech companies to integrate AI into their products and fund other promising startups.

In a memo to employees, Friar wrote that OpenAI will use the funds to purchase more computing power and cover other operating costs.

The Wall Street Journal previously reported on the talks with Apple.

First published: 01.09.2024 | 21:05 IST