Bank of America extends $520 million OpenAI loan as Wall Street races for AI IPO advisory roles

Bank of America Breaks Into OpenAI Financing With Strategic Credit Line

Bank of America has extended a $520 million credit line to OpenAI in recent weeks, marking the bank's first loan to the artificial intelligence company as it prepares for what could become one of the most significant public offerings in tech history1

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. The OpenAI loan represents a notable shift for the second-largest American lender, which had previously declined the company's funding requests as recently as last year due to concerns about ventures with high capital expenditures and unprofitable business models5

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The credit facility adds to an existing undrawn facility established by competing banks, bringing OpenAI's total available capital above $5 billion5

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. In 2024, OpenAI approached a group of nine global banks to arrange a $4 billion line of credit, but Bank of America was notably absent from that lineup, which included its top U.S. rivals—a reflection of its more conservative lending philosophy at the time3

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Wall Street's Race for AI IPOs Intensifies

The $520 million credit line positions Bank of America as one of OpenAI's largest lenders and strengthens its credentials in AI-related capital markets financing1

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. BofA has helped raise nearly $500 billion in capital for AI-related companies since 2025, accounting for 60% of such fundraising across investment-grade debt, leveraged finance and equity capital markets1

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. The bank is now eyeing advisory roles on the planned IPOs of both OpenAI and Anthropic, according to sources familiar with the matter4

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OpenAI's preparations for an initial public offering heavily influenced Bank of America's decision to provide financing, with sources indicating that missing out on such high-profile stock market listings would be viewed as an embarrassment for the banking giant3

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. The move follows BofA's role in SpaceX's blockbuster IPO, where it served as a joint bookrunner and led the U.S. retail distribution effort. SpaceX debuted in June at a valuation of more than $2 trillion after pulling off the world's largest IPO1

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OpenAI IPO Timeline and Valuation Targets

OpenAI confidentially filed for a U.S. IPO last month, with the ChatGPT maker targeting a trillion-dollar valuation in a listing that could come as soon as this year1

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. However, recent reporting suggests the timeline may shift to 2027 as the company burns through cash at a record pace2

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. The ChatGPT maker is reportedly leaning toward holding off until next year, with advisers presenting Sam Altman with two options: wait until 2027 to reach the trillion-dollar mark, or settle for a smaller valuation and list in 2026. Altman reportedly called any reduction a "non-starter"2

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Mega IPOs are typically very lucrative for Wall Street banks, generating hundreds of millions of dollars in fees while opening the door to years of follow-on business1

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. This explains Wall Street's race for AI IPOs and why financing AI companies has become a strategic priority for major lenders.

Strategic Shift in Bank of America's Risk Appetite

Bank of America's decision to extend credit marks a departure from Chief Executive Officer Brian Moynihan's "responsible growth" strategy that has historically discouraged speculative risk-taking for corporate clients5

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. The bank grew more comfortable financing AI companies once it determined the market would support their business models despite lack of profitability, according to sources5

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. Bank of America's management also noted investor confidence in backing AI companies at valuations not tied to underlying earnings, a shift in market sentiment that contributed to the firm's increased confidence in extending credit to the sector5

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Participation in a major stock listing is viewed as important for Bank of America's wealth advisory business, particularly its Merrill Lynch division5

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. OpenAI's strategic financial moves, including securing diverse funding sources, reflect the company's evolution from its 2015 founding as a research-focused nonprofit to creating a for-profit arm four years later to help fund the soaring costs of developing AI systems4

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. As the AI race intensifies and capital requirements continue to grow, OpenAI's ability to secure funding from major financial institutions signals broader market acceptance of AI companies' long-term viability, even amid questions about profitability timelines and sustainable business models.