OpenAI is valued at $157 billion; Microsoft and Nvidia join the round

OpenAI has closed its long-awaited funding round at a valuation of $157 billion, including the $6.6 billion the company raised from an extensive list of investment firms and large technology companies.

While OpenAI did not name the investors in Wednesday's press release, a person familiar with the matter said the round was led by Thrive Capital and included participation from existing backers Microsoft as well as chip manufacturers NvidiaSoftBank and others. Thrive planned to invest $1 billion in the round, CNBC previously reported.

The rapid rise of OpenAI, which began with the launch of ChatGPT in late 2022, has been the biggest story in the tech industry in recent years, bringing the concept of generative artificial intelligence into the mainstream and paving the way for tens of billions of dollars of investment in it AI infrastructure.

“The new funding will allow us to double our leadership in AI research, increase computing capacity, and continue to develop tools that help people solve difficult problems,” OpenAI wrote in a blog post on Wednesday.

OpenAI generated $300 million in revenue last month, up 1,700% since the beginning of last year, CNBC confirmed last week following a New York Times report. The company expects revenue of $11.6 billion next year, up from $3.7 billion in 2024, according to a person close to OpenAI who asked not to be identified because the Financial information is confidential.

But all that revenue is extremely costly, as OpenAI needs to increase purchases of Nvidia's graphics processing units (GPUs) to train and run its large language models. The company expects a loss of about $5 billion this year, the person said. Microsoft has invested billions of dollars in OpenAI and is a key partner as the software giant strengthens its Azure cloud business.

Earlier this year, OpenAI was valued at $80 billion, up from $29 billion in 2023. After ChatGPT's viral growth, momentum continued with new products for businesses and an expansion into AI-generated photos and videos.

OpenAI now has 250 million weekly active users on ChatGPT, CFO Sarah Friar said in a statement to CNBC. There are also 11 million ChatGPT Plus subscribers and 1 million paid business users on ChatGPT, a person close to the company said.

“AI is already personalizing learning, accelerating healthcare breakthroughs and increasing productivity,” Friar said in the statement. “And this is just the beginning.”

OpenAI is experiencing many bumps along the way, including the loss of key executives, a trend that continued last week.

Last Wednesday, OpenAI Chief Technology Officer Mira Murati, who briefly served as interim CEO, said she would be leaving the company after 6½ years. Shortly thereafter, research chief Bob McGrew and Barret Zoph, a research vice president, said they were leaving the company.

In an interview the next day at Italian Tech Week, Sam Altman, CEO of OpenAI, said: “I think that this will hopefully be a great transition for everyone involved, and I hope that OpenAI will be stronger in it, as we are in all of our transitions.”

Also on Thursday, OpenAI held a wide-ranging meeting after its board decided to consider restructuring the company into a for-profit entity, according to a person familiar with the matter. Altman said the departures were not related to the potential restructuring, contrary to some media reports.

If the change occurs, the nonprofit segment would remain a separate entity, the source said.

At Thursday's meeting, Altman denied reports of plans to take a “huge equity stake” in the company, calling that information “simply not true,” according to a person present.

OpenAI Chairman Bret Taylor told CNBC in a statement last week that while the board had discussed the matter, concrete numbers were not on the table.

“The board discussed whether it would be beneficial to the company and our mission if Sam were compensated with equity, but no specific numbers were discussed nor were any decisions made,” Taylor said.

The latest funding round also included participation from Khosla Ventures, Altimeter Capital, Fidelity, MGX and Tiger Global, sources told CNBC.