Microsoft-backed artificial intelligence startup OpenAI, the creator of ChatGPT, is reportedly holding discussions with investors over a fresh round of funding that would value it at or above $100 billion — cementing OpenAI’s status as one of the world’s most valuable startups.

A report from Bloomberg late Friday cited people with knowledge of the matter as saying investors who may potentially be involved in the new funding round are currently holding preliminary discussions with the company. Details such as the terms, timing and valuation of the round have not yet been finalized, and could still change, the people said.

If the funding round does occur, it would lift OpenAI to become the second-most valuable startup in the U.S. behind Elon Musk’s Space Exploration Technologies Corp., according to data provided by CB Insights.

Bloomberg also reported that OpenAI is involved in discussions with the Abu Dhabi-based fund G42 to raise money for a new chipmaking venture. It’s not clear if those talks are related to the wider funding round being discussed, the report said. However, OpenAI is said to be discussing between $8 billion and $10 billion from G42, according to the report.

Reports that OpenAI Chief Executive Sam Altman was seeking capital for a chipmaking venture, code-named Tigris, emerged last month. It’s said that the CEO wants to produce semiconductor chips that can compete with Nvidia Corp.’s graphics processing units, which currently dominate the market for AI workloads. The goal is to create a lower cost alternative to Nvidia’s chips, which would help OpenAI reduce its ongoing costs for running its AI services.

Little is known about the proposed chips, but it’s likely that the startup could create some kind of customized tensor processing unit. That’s because TPUs are believed to be capable of outperforming Nvidia’s AI accelerators, though the timeline for their development is long and complex. It’s said that a number of prominent venture capital firms, including some of OpenAI’s earliest investors and also Microsoft Corp., are interested in backing Altman’s chip venture.

Adding weight to the story is OpenAI’s existing relationship with G42. In October, the Abu Dhabi-based firm announced it was partnering with OpenAI to deliver “cutting-edge AI solutions” to the United Arab Emirates and regional markets.

Elsewhere, OpenAI is said to be close to completing a separate tender offer led by Thrive Capital, which would allow its employees to sell their shares at a valuation of around $86 billion, Bloomberg’s report said.

OpenAI is already extremely well-funded, with its chief backer Microsoft committing to invest more than $10 billion in the company last January. That came after the startup released its ChatGPT chatbot in November 2022, kicking off a craze around generative AI.

ChatGPT, which is able to generate humanlike responses to almost any kind of prompt, has fueled a rapid rise in OpenAI’s value. However, the company has had its fair share of negative press recently.

In November, its board of directors caused a major kerfuffle when it suddenly announced that Altman had been fired, without giving a detailed explanation for the reasons behind his ousting. The move sparked concerns among both investors and employees, and it’s believed that it was their influence that led to Altman’s reinstatement just four days later, along with a commitment to form a new board. The company has since attempted to signal that it’s refocusing its energies on product development.

Later that month, Altman said Microsoft – which had earlier offered him a job – would take a nonvoting observer position on the company’s board.

OpenAI isn’t the only AI startup that has attracted millions of dollars in funding. Amazon.com Inc. and Google LLC’s parent company Alphabet Inc. have invested heavily in OpenAI rival Anthropic PBC, while Salesforce Inc. recently led a $235 million investment in Hugging Face Inc., valuing that company at $4.5 billion.

Photo: OpenAI