OpenAI is negotiating a new funding round that could boost its valuation to more than $100 billion, multiple publications reported today.

The Wall Street Journal cited sources as saying that the ChatGPT developer is seeking to raise several billion dollars. Thrive Capital is expected to lead the raise with a $1 billion contribution. Microsoft Corp., which has provided OpenAI with $13 billion worth of cloud infrastructure and funding to date, is expected to participate as well.

OpenAI Chief Financial Officer Sarah Friar confirmed the fundraising effort in an internal memo, Bloomberg reported. The executive added that the company plans to hold a tender offer later this year. That’s a transaction in which a startup’s employees can sell some of their stock.

The company reportedly received a $80 billion valuation in a February tender offer that included Thrive Capital. The valuation bump the company is expected to receive in its upcoming funding round hints at investor optimism about its growth prospects. OpenAI’s annualized recurring revenue reportedly topped $2 billion in February, less than six months after reaching the $1 billion mark.

Friar told employees that some of the proceeds from the new round will be used to buy additional compute capacity. In March, reports emerged that OpenAI and Microsoft are teaming up to assemble an artificial intelligence supercomputer powered by millions of processors. Given that high-end data center graphics cards sell for more than $30,000 apiece, the system’s cost could run into the billions of dollars. Sources told The Information that the companies have codenamed the supercomputer Stargate and expect to bring it online in 2028 at the earliest.

A new funding round could also ease OpenAI’s efforts to launch the long-rumored successor to its flagship GPT-4o model. The company recently disclosed that it has started training the new model, which is often referred to as GPT-5.

Sources told Reuters in July that OpenAI is developing a technology called Strawberry to enhance its LLMs’ reasoning capabilities. It’s believed the technology could make neural networks better at tasks such as carrying out online research, solving complicated math problems and generating software code. It’s unclear which, if any, of Strawberry’s features will find their way into GPT-5.

New model development is not the only task that a fresh capital infusion could simplify for OpenAI. The company recently started testing an internally developed search engine, SearchGPT, that answers user queries with natural language responses. A multibillion-dollar investment would make it easier for the company to finance new market expansion initiatives in tandem with its costly AI development projects.

Image: OpenAI