Anthropic and OpenAI raise billions as LLM race accelerates
The AI boom took another leap forward this week as rival labs Anthropic and OpenAI moved to lock in eye-watering sums of funding, as the chatbot race accelerates.
Anthropic has closed a funding round of between $10bn and $15bn at a valuation of around $350bn, comfortably overshooting its original target.
The round was led by Coatue and Singapore’s sovereign wealth fund GIC, with Sequoia Capital also joining, despite being a major backer of rival OpenAI.
Meanwhile, Reuters reported that Japan’s SoftBank is in talks to invest up to a further $30bn in OpenAI, as part of a mammoth funding round that could raise as much as $100bn, and value the ChatGPT owner at roughly $830bn.
SoftBank already owns about 11 per cent of OpenAI, thanks to a $41bn investment completed late last year.
Together, these deals prove that despite lingering AI bubble fears, the AI race is still intensely capital hungry, and still very much accelerating.
Founded in 2021 by former OpenAI researchers including chief executive Dario Amodei, Anthropic has rapidly emerged as OpenAI’s most credible rival.
Its Claude models have gained traction with the private sector, while its coding assistant, Claude Code, has seen a surge in adoption among developers.
Amodei said earlier this month that Anthropic generated close to $10bn in revenue last year, a huge feat for a company barely four years old, and a key factor convincing investors to ascribe to such a lofty valuation.
Microsoft and Nvidia, which last year signalled plans to invest up to a combined $15bn in Anthropic, have yet to confirm whether they will join this round.
Their commitments would further blur the already tangled web of circular alliances in the market, with Microsoft deeply tied to OpenAI and Nvidia supplying the chips that underpin nearly every leading model.
Big funding, bigger questions
But the funding frenzy comes with growing unease about sustainability.
Training frontier AI models burns cash at an unprecedented rate, and while revenues are rising quickly, costs are climbing just as fast.
Concerns are also mounting around returns from simply scaling models with more data and compute starting to diminish.
Amodei on Tuesday himself warned that powerful AI systems could create serious economic and security risks.
The move reinforces Anthropic’s pitch as a more safety-focused alternative, as governments sharpen their regulatory gaze within the tech sector.
Yet for investors, caution is being outweighed by fear of missing out.
With OpenAI and Anthropic now commanding valuations that rival the world’s largest listed tech firms, it is clear that the only way to stay cimpetutuve is to keep raising huge injections of capital.