OpenAI Secures $110B, Pentagon Deal
OpenAI just announced a historic $110 billion funding round led by Amazon, Nvidia, and SoftBank, rocketing its valuation to $730 billion. As part of the deal, AWS becomes the exclusive cloud provider for its new platform. Hours later, the Pentagon struck a deal to use OpenAI's systems while simultaneously banning rival Anthropic from all federal contracts.
This latest funding round is the largest in the history of private technology financing, bringing OpenAI's post-money valuation to an estimated $840 billion. The investment is structured with Amazon contributing $50 billion, while Nvidia and SoftBank are each adding $30 billion. The deal with Amazon significantly expands a prior multi-year agreement, adding another $100 billion in cloud spending over eight years. As part of this, OpenAI will consume approximately 2 gigawatts of power using Amazon's custom Trainium AI accelerator chips to power its new "Frontier" enterprise platform and other advanced workloads. Nvidia's $30 billion investment is tied to significant hardware commitments. OpenAI has agreed to use 2 gigawatts for training and 3 gigawatts for inference on Nvidia's upcoming "Vera Rubin" GPU architecture, securing access to the next generation of AI chips. SoftBank's $30 billion contribution is positioned as long-term capital to support OpenAI's ecosystem expansion across a broader industrial system. The investment aligns with the firm's ongoing strategy to heavily back what it sees as the next stage of the AI revolution. The Pentagon deal aligns with its 2023 "Data, Analytics and Artificial Intelligence Adoption Strategy," which aims to accelerate the military's adoption of AI to maintain a competitive advantage. This strategy builds on long-running initiatives like Project Maven, which began in 2017 to use AI for analyzing battlefield data. The simultaneous ban on Anthropic stems from a contract dispute over the use of its AI, Claude. Anthropic sought to prohibit its technology from being used for mass surveillance of American citizens or in autonomous weapons systems that can make targeting decisions without human intervention. The Pentagon reportedly insisted on the right to use the technology for "all lawful purposes" and, after negotiations broke down, President Trump directed all federal agencies to cease using Anthropic's technology. This created an opening for competitors like OpenAI and Elon Musk's xAI, which recently signed a deal for its Grok model to be used in classified systems.
