Microsoft-backed (MSFT) OpenAI, the company behind artificial intelligence assistant ChatGPT, has been valued at $150 billion in a new funding round that will see the company raise $6.5 billion.
According to multiple media reports, OpenAI is in talks to raise additional money from venture capitalists and institutional investors as it looks to fund its meteoric growth. The new valuation of $150 billion is a 74% increase from the last valuation of $86 billion placed on the company earlier this year.
Notable Investors
Thrive Capital is leading this funding round, according to a report by Bloomberg News. Other media reports say that Microsoft, Apple (AAPL), and Nvidia (NVDA) are also looking to participate and take a position in OpenAI, which is one of the world’s leading developers of generative AI applications and models.
Microsoft has already invested more than $10 billion in OpenAI, and the two companies have a strategic partnership. Microsoft has added OpenAI’s technology to several of its services and products, including its Bing online search engine and Teams video conference platform. The company has also talked about adding OpenAI features to its Xbox video game console and cloud computing unit.
Rising Valuation
OpenAI’s valuation has been steadily rising. The company was valued at $29 billion in 2023. Reports only two weeks ago pegged the valuation at around $100 billion. OpenAI is benefitting from booming demand for its AI technology that is fueling breakneck growth at the San Francisco-based company.
Media reports claim that OpenAI’s revenue surpassed $2 billion earlier this year, with growth accelerating since late 2022 after the company launched its first iteration of the ChatGPT chatbot. In recent months, the company has introduced new AI products for businesses and expanded into AI-generated photos and videos.
Most recently, OpenAI announced plans to launch its own internet search engine, tentatively called “SearchGPT,” that aims to challenge Alphabet’s (GOOGL) dominance in online search. Investors continue to wonder when OpenAI might go public, though the company’s CEO, Sam Altman, has repeatedly downplayed a possible initial public offering (IPO).
Is MSFT Stock a Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 30 Buys assigned in the past three months, as indicated by the graphic below. After a 28% rally in its share price over the past year, the average MSFT price target of $502.84 per share implies 18.86% upside potential.
