OpenAI raises $110B on $730B pre-money valuation

$730B pre-money for a company where each model is roughly 2x profitable on its own, but each next model costs 10x the last. The whole thing only works if scaling keeps delivering. Research (Sara Hooker et al.) is not encouraging on that front, compact models already outperform massive predecessors on downstream tasks while scaling laws only predict pre-training loss reliably.

Wrote about both the per-model math and the scaling question:

(1) https://philippdubach.com/posts/ai-models-as-standalone-pls/

(2) https://philippdubach.com/posts/the-most-expensive-assumptio...

EDIT: Removed the dot after et; bc apparently it's an entire word (the more you know..)

IMO this looks largely like another circular investment. Amazon's investment is tied to OpenAI using AWS for their Frontier product and I assume Nvidia's conditions are that OpenAI continue buying hardware from them. Then there's SoftBank though given that those are the same guys that invested heavily in WeWork, I assume this is just very brash bullishness on their part.

From my perspective, I hope that OpenAI survives and can pull of their IPO but I just have that nagging feeling in my gut that their IPO will be rejected in much the same way that the WeWork IPO was rejected.

On the one hand you can look at these companies investing and take it as a signal that there is something there (in OpenAI) that's worth investing in. On the other hand all these companies that are investing are basically getting that investment back through spending commitments and such and are just using OpenAI as a proxy for what is essentially buying more revenue for themselves.

When their IPO hits later this year I hope that it's the former case and there's actually some good underlying fundamentals to invest in. But based on everything I've read, my gut is telling me they will eventually implode under the weight of their business model and spending commitments.

Someone please explain how OpenAI is not Netscape 2026. They had first mover advantage but no network effect, no moat, and are racing to stay ahead of infinitely resourced incumbents.

These are geopolitical activities akin to the arms buildup of the Cold War, but happening somewhat more openly through the guise of private sector investments. The names of the companies involved are ephemeral. The numbers "invested" are largely imaginary, just play money pumped into the system over the last few years, flowing around, searching for a place to park. The result will be a certain amount of tangible infrastructure in the form of datacenters, power plants, semiconductor fabs. It's a Hail Mary move to keep pace with a certain geopolitical competitor. This process may propel society to the next level or may collapse it, depending on how society chooses to use these resources and how successful the competitor is at its own similar endeavor.

> Amazon will start with an initial $15 billion investment, followed by another $35 billion in the coming months when certain conditions are met.

Those conditions are an IPO or reaching AGI [1].

Nvidia and SofBank will pay in installments.

Also very interesting that Microsoft decided to not invest in this round. A PR statement was made though [2].

[1] https://americanbazaaronline.com/2026/02/26/amazon-to-invest...

[2] https://openai.com/index/continuing-microsoft-partnership/

Hard not to hear the word “bailout” in my head when I see this many billions being tossed around.

Amazon hedging $35 billion on an IPO (we know the odds of AGI with LLMs are vanishing small) is concerning. The hedge signals that they think it's a good "greater fool" investment, otherwise they should be happy to take equity in a company they think will be stable/profitable.

Depressing to see trillions sloshing around, and yet no jobs to be found.

So let´s see if I understood well this one: Got 110 Billions with the promise that either AGI will happen soon (:) or going public before the end of the year. Eitherway you get to double your 110 Billions no matter what (who will be left to pay the full bill after it, public or public)?

Very interesting, I will follow it closely, mostly to see how you ROI 110 Billions in a couple of years.

$110B at $840B post-money valuation for OpenAI vs

$30B at $380B post-money for Anthropic announced two weeks ago

This does not increase my confidence in OpenAI's future

This should probably change to https://openai.com/index/scaling-ai-for-everyone/ which has more details.

> Today we’re announcing $110B in new investment at a $730B pre-money valuation. This includes $30B from SoftBank, $30B from NVIDIA, and $50B from Amazon.

Hopefully this will allow them to continue to provide me unreasonable amounts of compute for €20/month. Enjoying it while it lasts…

Without circular investments and valuations what would Open AI be worth? 100B? 300B? Entirely on revenue alone it seems like 20B. Current valuation appears to be two orders of magnitude off.

There's this saying that if you owe the bank a million dollars, you have a big problem, but if you owe the bank 100 million dollars, the bank has a big problem.

Is the same thing true for corporations? At some point the numbers are so wild the entire economy must help you succeed? I don't mean "too big to fail" exactly, more like "so big eventual success is guaranteed at all costs"

What would really help is knowing the details of such funding. The hierarchy of who gets paid first in event of going under is very illuminating and while I am not a banker I always wonder if there are caveats too complicated even for the large investors to understand

HN told me OpenAI was on the verge of collapse.

Everyone thinks this bubble will continue until AGI(bulls) or until someone calls them on it(bears). I think it will continue until someone finds a quick way to make cheap energy(bullish) or until we can't build more power plants to support AI growth(bearish).

While nothing fancy has happened yet in the area of cheap energy, there is still enough power around the world to build AI data centers. The problem is this power exits in countries that the West has decided, many times for good reasons, they don't want to deal with their leaders.

I'm predicting that over 2027, either the US will become more aggressive in making war with these countries or company CEOs will start developing "reality-distorsion-fields" around them and decide having enough power for the next datacenter is more for the good of humanity. Before that Europe will decide that AI training on human faces(eg. of non-Europeans) is not really a problem and will allow US companies to train their models in EU countries.

SoftBank? The music must be stopping soon, hold onto your butts.

Is OpenAI giving employees RSUs? What good are those under these astronomical valuations?

Less than a decade ago companies reaching 1 trillion was still every much "out there". Now we have an IPO at almost 1 trillion.

It's clear that the stock market cannot be considered normal anymore, held up on hopes at prayers at best.

Puff puff until it pops!

> We continue to have a great relationship with Microsoft. Our stateless API will remain exclusive to Azure, and we will build out much more capacity with them.

This sounds a bit like going forward (some) OpenAI APIs will also run on platforms other than Azure (AWS)?

Anyone knows more?

Wow! This is circular financing. Sharknado, Altnado….

Interesting story for sure (to be clear I'm not talking about the writing by Reuters), but would you buy or skip the OpenAi IPO?

To me it feels like one of those throw some play money into it and see what happens sort of situations. Expect it will return negative due to the raw financials and outlook, but small chance the brand carries enough weight with the public that it spikes.

I'd love to hear other thoughts though

Nvidia will get all that money back via GPU purchases, Amazon via cloud rental and SoftBank is being typical SoftBank - a rich but not particularly bright kid in a class :) .

Does this mean they won't IPO this year?

Does anyone have any ethical concerns using openai regarding money donated to the current US administration in one way or another? I will search for more accurate details about that situation. I know about several other ethical concerns with openai that people have, including copyright and other considerations regarding the work being trained on, as well as lack of action regarding users who are harmed by their usage of the product, often regarding mental health, environmental concerns, actually quite a few others, but I am interested if many people think their political donations are an issue or not.

The round is still open, Amazon is funding in tranches, and Sam doesnt get all the cash until he hits unknown metrics. Sounds like a down round.

> The Information had previously reported that $35 billion of Amazon’s investment could be contingent on the company either achieving AGI or making its IPO by the end of the year. OpenAI’s announcement confirms the funding split, but says only that the additional $35 billion will arrive “in the coming months when certain conditions are met.”

Incredible.

Okay, I can understand investment from SoftBank, and maybe somewhat from Amazon (if they plan to use OpenAI's models), but investment from NVidia who will then sell OpenAI the GPUs with X% markup doesn't make sense to me.

I love how people think the company that basically invented ai is going out of business. Clearly OpenAI is a massive success and will continue to be

Ok, I'm getting out.

That's a pretty lofty valuation for a company that has yet to demonstrate code generation anywhere near Anthropic's models if they're leaning into the engineering angle.

and they say its not a bubble! we saw it with oracle deal, big announcement and than nothing, same with nvidia and now same thing is going again i hpe this is cash infusion and not some credit deal.

It’s Tesla only big tech are the suckers.

I this $110 Billion more or just $110 billion historically?

730 Billion certainly is a bubble that will pop sooner or later.

Only $730B? Why stop there? As long as we're making stuff up, let's go big. What about $10T?

I guess no GPT on Bedrock still it seems

What are they going to do with it?

OpenAI's just trading equity for GPU credits at this point?

Burn baby, burn!

BTW, real money or credits?

Feels like Nvidia getting in the game here might just put them at more risk. If things don't work out they'll be out their money and future sales and so on.

It is bad enough AI sucked up so much investment money, hitting companies that do make profitable things hard if AI bubble collapses would be bad...

Source: https://openai.com/index/scaling-ai-for-everyone/ (https://news.ycombinator.com/item?id=47180302)

I thought with OpenClaw they'd get more than a 3.67x multiplier of what Anthropic raised.

Source: https://openai.com/index/scaling-ai-for-everyone/ (https://news.ycombinator.com/item?id=47180302)

$30B from Nvidia… so the investments are locked in circular dependency. Great for the economy.

Our economy has turned into an ouroboros: a circle of snakes shitting in each others mouth until they get so sick we the taxpayer will get the privilege of bailing them out. I'm really fucking excited to eat shit for the 3rd time in 18 years. Super pumped.

This time, does the $100B actually exist?

https://www.inc.com/leila-sheridan/nvidia-is-wavering-on-its...

What's the statue of limitations for securities fraud? The current administration won't last forever.

Taking the circular deals up another magnitude?

There is not a single OpenAI model in the top 10 on openrouter's ranking page. The market is saying something about the comparative value of OpenAI.

Edit: yes, it is true that many people do integrate directly with OpenAI. That doesn't negate the fact that Openrouter users are largely not using OpenAI.

Big number gets bigger

Kind of leaving out a lot of detail there:

- Amazon's $50B is only $15B, with the rest being "after certain conditions are met", whatever that means (probably an IPO, which isn't happening)

- The $30B each from softbank and NVIDIA is paid in installments

So this is more a $35B fundraise, with a _promise_ of more, maybe, if conditions are met. Not _bad_, but yet more gaslighting from Mr Altman. Anyone reporting this as a closed fundraising deal is being disingenuous at best.

Circular-breathing causes the air to heat up, causing expansion. This is how a balloon can expand even when someone is breathing air from inside it.

s/breathing/investment/g s/balloon/bubble/g s/air/money/g

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Two economists were walking down the street when they spotted a giant dog turd on the ground.

One of them wanted to have some fun, so said to the other - "I'll give you $100 if you take a big bite of that turd".

His colleague figured $100 was a good chunk of cash, so did the deed. Feeling thoroughly humiliated, he pocketed the $100 and they carried on.

Further down the street they came upon another turd.

The angry economist now wanted revenge so made the same proposal back to his colleague, who also agreed and took a bite of the turd, earning back his $100.

Later one of them said to the other "you know, I can't help but feel we both ate shit for no reason."

His collegue replied "what do you mean? We raised the national GDP by $200."

If OpenAI is Pied Piper, who is Russ Hanneman in all this?

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