OpenAI Lands $110B and a Pentagon Deal
OpenAI just announced a record-shattering $110 billion funding round backed by Amazon and Nvidia. Hours later, the company struck a major deal to supply AI to the Pentagon. The move came as the Trump administration simultaneously directed all federal agencies to cease using rival AI from Anthropic, which it labeled a “supply risk.”
The record-breaking $110 billion funding round vaults OpenAI to a $730 billion pre-money valuation. The investment is led by $50 billion from Amazon and $30 billion each from Nvidia and SoftBank. This dwarfs OpenAI's previous largest funding round of $40 billion in March 2025. Amazon's investment is tied to a significant expansion of a cloud computing deal, with OpenAI committing to spend an additional $100 billion on Amazon Web Services over the next eight years. Nvidia's $30 billion investment is linked to OpenAI utilizing its upcoming "Vera Rubin" systems for AI training and inference. The Pentagon deal will see OpenAI's models deployed on classified military networks. OpenAI CEO Sam Altman stated the agreement includes prohibitions on domestic mass surveillance and requires human responsibility for the use of force, including autonomous weapon systems. The directive to cease using Anthropic's AI came after a public clash over these very safeguards. The Pentagon demanded that Anthropic remove its ethical guardrails to allow for "all lawful uses," which the company refused, citing concerns about mass surveillance and fully autonomous weapons. Anthropic had a $200 million contract with the Pentagon and was the only AI model approved for use in the military's classified systems. Defense Secretary Pete Hegseth has now designated Anthropic a "supply chain risk," a label typically reserved for foreign adversaries. The Trump administration has given the Pentagon a six-month transition period to phase out Anthropic's technology. In a statement, Anthropic called the administration's action "unprecedented and legally unsound" and announced its intention to challenge the "supply chain risk" designation in court.
