OpenAI in talks to raise £32bn as US seeks to maintain lead in global AI race

The funding will be used to help pay for OpenAI's commitment to Stargate, a US government-backed joint venture between the AI company, SoftBank and Oracle to invest up to £405bn in AI projects and infrastructure

OpenAI is reportedly in preliminary discussions to secure $40bn (£32bn) in a fresh funding round, which would catapult the company's valuation to over $300bn (£242bn).

Reports suggest that Japanese tech titan SoftBank could spearhead this funding round, setting a new record for the highest amount raised in a single round by a private firm.

This news emerges amid the sudden rise of Chinese start-up DeepSeek, which has unveiled an AI model seemingly capable of rivalling major US competitors like OpenAI’s ChatGPT. It does so at a fraction of the cost, thereby challenging pre-existing notions about the financial investment required to develop and launch top-tier AI products.

Despite this, the proposed funding round for the creator of ChatGPT would mark a significant surge in OpenAI’s valuation, which stood at around $150bn (£121bn) following a $6.6bn (£5.3bn) funding round in October.

Reports indicate that some of the funds invested by SoftBank may be allocated towards financing OpenAI’s commitment to Stargate—a US government-backed joint venture involving OpenAI, SoftBank, and Oracle. This venture aims to invest up to $500bn in AI projects and infrastructure to ensure the US maintains its lead over China in the global AI race.

OpenAI has accused DeepSeek of replicating its work to construct its AI models using a method known as distillation. This technique involves a newer, smaller AI system learning from a larger, more established one to train itself.

Experts have pointed out that this method is prevalent in the AI industry, although several larger US tech companies have deemed it a breach of their terms of service in recent years. AI has emerged as the pivotal technology within the sector in recent years, ignited by the initial launch of ChatGPT in late 2022.

Since then, generative AI tools – those capable of creating new content from a single prompt – have become mainstream through chatbots and other standalone productivity tools, but are also increasingly being integrated into the operating systems of smartphones and other devices.

In 2024, Samsung, Google and Apple all debuted generative AI tools on their smartphones for the first time.