OpenAI Lands $110B, Scores Pentagon Deal
OpenAI has closed a historic $110 billion funding round backed by Amazon and Nvidia to "scale AI for everyone." The deal came just as the U.S. government ordered all federal agencies to stop using competitor Anthropic's AI, citing a "supply risk." Hours later, OpenAI reportedly struck a deal to provide AI systems to the Pentagon, filling the gap left by its rival.
The massive funding round boosts OpenAI's pre-money valuation to $730 billion. New investor Amazon contributed $50 billion, while existing shareholders Nvidia and SoftBank each added $30 billion to the round. The deal marks the largest private financing in history. The move against Anthropic came after a weeks-long standoff with the Pentagon. Anthropic refused to grant the military unrestricted use of its Claude AI model, insisting on safeguards against its use for mass domestic surveillance and in fully autonomous weapons systems. In response to the impasse, Defense Secretary Pete Hegseth designated Anthropic a "supply-chain risk," a label historically reserved for foreign adversaries like China's Huawei. Federal agencies have been given six months to phase out their use of Anthropic's products. Anthropic, which had a contract worth up to $200 million with the Pentagon, has stated it will challenge the designation in court. The company called the move an "unprecedented action" and an attempt at intimidation. Hours after the directive against Anthropic, OpenAI's CEO Sam Altman announced his company had struck a deal to provide AI to the Pentagon. Altman stated that the agreement includes the same ethical red lines that were a sticking point for Anthropic, such as prohibitions on mass surveillance and requirements for human responsibility in the use of force.
