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OpenAI Secures $6.6B, Becomes First Trillion-Yuan AI Firm Amid Ambitious Expansion Plans

AInvestSunday, Oct 20, 2024 9:00 am ET
1min read

OpenAI has successfully concluded its latest financing round, securing $6.6 billion and achieving a post-investment valuation of $157 billion, marking it as the first AI company to reach a trillion-yuan valuation. Thrive Capital led the round with a $1.3 billion investment, joined by Microsoft, SoftBank, and Nvidia. Despite recent organizational changes within OpenAI, investor interest remains robust.

This substantial financing will help alleviate OpenAI's financial challenges, with expected revenue for the year projected at $3.7 billion, largely driven by ChatGPT. However, OpenAI faces a spending gap of $5 billion, prompting this funding round to provide critical support. The company plans to transition to a for-profit entity within two years, as outlined in the financing terms. Failure to do so would convert the funding into debt.

Nvidia achieved a significant milestone as its stock closed at a record high, contributing to a market valuation of $3.4 trillion, second only to Apple. The company's next-generation AI GPU, Blackwell, is generating substantial demand, with anticipated revenue in the billions for the fourth quarter. This positions Nvidia prominently as one of the leaders in AI infrastructure development.

Meanwhile, Tesla is experiencing a dip in its UK sales, marking the first decline since 2013. The revenue for its UK division fell to £2.47 billion in the past 12 months from £2.84 billion previously. This downturn suggests potential challenges amid fluctuating demand in the UK market.

OpenAI continues to expand its operations by establishing a new office in Bellevue, near Microsoft's headquarters. This move aims to leverage the rich engineering talent in the Seattle area, following a substantial $6.5 billion fundraising effort. The company also announced plans to open additional offices in New York, Paris, Brussels, and Singapore.

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