Berber Jin and Jack Pitcher report in the Wall Street Journal and Thomas Smith reports in Fast Company:
OpenAI completed the largest funding round in Silicon Valley history, raising $122 billion ahead of a blockbuster IPO expected by the end of the year. The deal, which values OpenAI at $852 billion shows how the ChatGPT-maker is diversifying its shareholder base ahead of its public listing. That’s despite the fact that AI companies still have modest revenues. OpenAI earned just $20 billion in 2025—less than Ross department stores, and about the same as Frito-Lay earns peddling potato chips. Given those earning realities, the current absurd level of investment feels unsustainable as AI ventures aren’t generating enough profit to justify their valuations. But if OpenAI’s new funding is any indication, the AI bubble isn’t going to burst. Yet.
OpenAI completed the largest funding round in Silicon Valley history, raising $122 billion ahead of a blockbuster IPO expected by the end of the year.
The deal, which values OpenAI at $852 billion, came with an additional perk: greater access to individual investors. As part of the financing, OpenAI raised more than $3 billion from wealthy investors through banks and said it would be included in several exchange-traded funds managed by ARK Invest, the investment firm led by technology bull Cathie Wood.
The deal shows how the ChatGPT-maker is diversifying its shareholder base ahead of its planned public listing, specifically among individual investors keen to gain exposure to some of the hottest names in the artificial-intelligence boom.
ARK’s flagship $6 billion Innovation ETF will have a roughly 3% exposure to OpenAI following the investment, and is the first private company the fund will hold, a person familiar with the matter said. OpenAI shares are already a small part of mutual funds and ETFs run by T. Rowe Price and Fidelity.
Amazon, Nvidia, and SoftBank committed $110 billion to the funding round, while additional cash came from Silicon Valley and Wall Street investment firms.
The new funding puts OpenAI on strong financial footing, giving it a crucial cash cushion to continue spending aggressively on AI chips for its research and products. It is also a signal of the company’s enduring appeal among top investors, even as rivals begin to close the gap in the AI race.
OpenAI is in the middle of a major strategy shift to concentrate its resources around building a new “superapp” tailored toward developers and business users. The company recently ditched its much-hyped Sora video app, and is looking at other areas to cut so it can focus its efforts on building so-called productivity tools, particularly coding assistants.
The company said it expects roughly half of its revenue to come from enterprises by the end of the year.
“AI is driving productivity gains, accelerating scientific discovery, and expanding what people and organizations can build,” OpenAI said. “This funding gives us the resources to continue to lead at the scale this moment demands.”
For years now, pundits and politicians have been predicting that the apparent AI bubble would soon burst.
Companies have poured hundreds of billions of dollars into snazzy new data centers and absurdly well compensated research teams in hopes of building powerful, wildly profitable AI models.
That’s despite the fact that even the most innovative AI companies still have modest revenues. OpenAI earned just $20 billion in 2025—less than the struggling Ross department stores make selling clothes, and about the same as Frito-Lay earns peddling potato chips.
Given those earning realities, the current absurd level of investment feels unsustainable. But if OpenAI’s massive new funding round is any indication, the AI bubble isn’t going to burst. At least, not yet.
Billions Upon Billions
In late February, OpenAI announced that it had raised $110 billion to continue building its world-leading frontier models.
The deal values OpenAI at between $730 and $840 billion. And perhaps more importantly, the round was led by massive companies and institutional investors, lending that valuation some real credibility.
Amazon reportedly chipped in $50 billion, NVIDIA contributed $30 billion, and SoftBank matched NVIDIA’s contribution. In turn, OpenAI agreed to use Amazon’s cloud infrastructure for some of its products, and secured access to more cutting-edge AI chips from NVIDIA.
OpenAI said the deal would allow it to scale “AI for everyone” while also funneling more capital into its nonprofit OpenAI Foundation.
The deal is especially notable because OpenAI is still a private company. Back in the olden days (which in Silicon Valley means “a decade ago”), companies had to go public to raise these kinds of funds.
Now, companies like OpenAI and Elon Musk’s newly merged xAI/SpaceX can push $1 trillion valuations without needing to involve pesky public market investors, or accept the scrutiny that doing an IPO brings.
Of course, OpenAI could always go public later—as many expect it to eventually do—and likely raise hundreds of billions more.
What Bubble?
OpenAI’s massive influx of cash is also notable because some industry experts thought it might never happen.
NVIDIA reportedly toyed with the idea of investing $100 billion into OpenAI all on its own, before seeming to get cold feet.
That pullback–coupled with OpenAI’s very weird governance structure—made some analysts nervous.
Stansberry Research’s Whitney Tilson wrote about a month before OpenAI’s February round was announced that “…’seeking’ $100 billion is very different than ‘receiving’ $100 billion,” and predicted “When (not if) OpenAI fails to raise the money it seeks, that will be a key indicator the bubble is bursting—and it will be time to get out.”
Likewise, analyst and NYU professor Gary Marcus told Goldman Sachs that “current AI ventures aren’t generating enough profit to justify their lofty valuations. People are starting to get that message. And if enough people get that message on the same day, it will start to look like a bank run.”
They needn’t have worried. OpenAI seems to have had no trouble at all completing one of history’s biggest private funding rounds.
And more investors–including tons of retail investors who would love something to invest in besides GameStop and Tesla–are almost certainly waiting in the wings.
All that suggests that fears of a funding failure—and subsequent popping of the AI bubble–were probably overblown. OpenAI now has plenty of cash to keep burning billions for months, at least.
The fact that OpenAI is continuing to pour money into building AI infrastructure also means that larger (and far richer) competitors like Google and Meta will be practically forced to do the same—or risk uncomfortable questions from their own investors.
The gravy train of AI money will thus continue to chug on, as the flywheel of AI funding shows no signs of slowing down.
Where it Ends
I’ll take a moment here to note that nothing in here is investment advice, and you shouldn’t trade based on anything in this article.
That’s especially true because despite the sunny picture painted by OpenAI’s gigantic raise, the fundamental business challenge facing generative AI remains unchanged.
Again, OpenAI’s revenue is paltry. Yes, it’s growing. But so is McDonald’s.
As multiple analysts have pointed out, investors are happy to overlook that and throw wads of money at OpenAI and its ilk because they expect generative AI to take over the labor market, make humans obsolete, and usher in an era of transformative leisure in which we all swim in lakes while benignly intelligent supercomputers run the economy for us.
The moment that future shows signs of not appearing, though, investors like Amazon could decide to pull back and put their money into more practical things, like selling you toasters and ruining legacy filmmaking.
That moment didn’t happen this month. But it could still be just around the corner.
“AI is certainly in a financial bubble,” Marcus told Goldman Sachs. “Just as no one could predict the exact moment the Dutch Tulip Mania would end, it’s impossible to know when this bubble will burst—but it will burst.”
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