OpenAI Lands Record $110B, Pentagon Deal

The latest funding round catapults OpenAI's valuation past many established tech giants, though it still trails titans like NVIDIA, Apple, Alphabet, and Microsoft. The $730 billion pre-money valuation is a significant jump from its $500 billion valuation in October of the previous year and a staggering increase from its $260 billion valuation in March 2025. This new financing is one of the largest private capital raises on record. The deal with the Pentagon to deploy AI models on classified networks marks a major strategic shift for OpenAI, embedding it within the U.S. national security framework. This agreement was reached after competitor Anthropic refused to loosen its ethical guidelines, leading the Trump administration to order all federal agencies to stop using Anthropic's technology. Defense Secretary Pete Hegseth designated Anthropic a "supply chain risk to national security," a label typically reserved for foreign adversaries. Anthropic had been in contentious negotiations with the Pentagon for months, seeking assurances that its AI, Claude, would not be used for mass domestic surveillance or in fully autonomous weapons without human oversight. The government's refusal to agree to these terms led to an impasse, with President Trump accusing the company of trying to "strong-arm" the Department of Defense. Anthropic had a $200 million, two-year agreement with the Pentagon and its AI was the only frontier model available for use with information classified up to the secret level. In its new agreement with the Pentagon, OpenAI secured the very same "red lines" that were the sticking point for Anthropic. CEO Sam Altman stated that prohibitions on domestic mass surveillance and a requirement for human responsibility in the use of force are core safety principles embedded in the deal. The Pentagon reportedly agreed to these principles, which are reflected in law and policy. Amazon's $50 billion investment is part of a larger strategic partnership, expanding a previous $38 billion commitment to a total of $100 billion over eight years for AWS cloud services. As part of the deal, OpenAI will use 2 gigawatts of computing capacity from Amazon's own Trainium AI chips. AWS will also be the exclusive third-party cloud distributor for "Frontier," OpenAI's new platform for building and managing AI agents. SoftBank's additional $30 billion brings its total investment in OpenAI to $64.6 billion, giving it an approximate 13% ownership stake. The Japanese investment giant, which has been increasingly focusing on AI, previously invested $22.5 billion in December of the prior year. Chairman and CEO Masayoshi Son said the investment will accelerate OpenAI's research and furthers SoftBank's own artificial superintelligence strategy. Nvidia's $30 billion investment deepens its existing partnership with OpenAI, expanding the computing capacity essential for building and deploying AI systems. OpenAI already utilizes Nvidia chips in data centers run by Microsoft, Oracle, and CoreWeave. The new funding will help OpenAI secure more of the advanced AI chips needed to maintain its competitive edge. Microsoft, a long-time major backer of OpenAI with over $13 billion invested since 2019, will not have its partnership altered by the new funding round. A joint statement affirmed their relationship remains "strong and central," and existing revenue-sharing and intellectual property agreements will stay in place.