OpenAI targets $30B at $1.4 trillion valuation
What's the story
OpenAI is speeding up a major fundraising effort and hopes to get investors to commit money before rival Anthropic enters the public stock market in mid-November. This unusual and aggressive plan could value the company behind ChatGPT at more than $1.4 trillion. One reason for moving so quickly is that OpenAI wants to stay ahead of Anthropic, as both AI companies seek money from many of the same investors.
Investor interest
Competition grows as AI companies seek investors' attention
The fast-moving fundraising round is expected to bring in about $30 billion. SoftBank Group, MGX, which is based in Abu Dhabi, and other investors who already support OpenAI are discussing whether to take part.
This move shows how strongly the two AI companies are competing for funding as both aim for valuations of more than $1 trillion.
This is happening as worries about rising interest rates grow, technology stocks experience large price swings, and investors pay closer attention to how much AI companies are worth.
Strategic move
Funding is being sped up because the IPO market could weaken
OpenAI is likely to complete its fundraising faster than companies usually do when raising such a large amount of money.
The company recently met with investment funds that mainly hold investments for the long term and with government-owned investment funds. At the same time, Anthropic held its own event for investors.
Investors who know the company say OpenAI needs money to pay for its large infrastructure plans and improve its financial position. This would help if a downturn in the market for initial public offerings (IPOs) pushes its planned 2027 stock market listing back even further.
Financial performance
OpenAI's revenue growth and pricing strategy
OpenAI is telling investors that its business is growing quickly following the launch of its GPT-6 Astra model.
The company says its revenue is now running at an annual rate of $50 billion and expects that rate to reach $70 billion by the end of the year.
OpenAI has also cut prices for its cheaper models, which has reportedly led people to use them more.
The company wants to finish raising money before Anthropic shares its financial results. Those details would give investors a clearer picture of Anthropic's business and allow them to compare the two companies.
Market position
Worries about Anthropic's valuation as revenue growth slows
Anthropic's revenue was running at an annual rate of about $65 billion by July. According to investor reports, its revenue for the third quarter of this year rose to $16.8 billion from $11.6 billion in the second quarter.
However, revenue is growing more slowly from month to month, raising concerns among investors about how much the company is worth.
Some current and potential Anthropic investors believe the company should enter the public market with a valuation closer to $1.5 trillion, rather than its target of $2 trillion. This follows third-quarter results that fell short of expectations.