Sam Altman Leads $150M Funding Round for AI Chip Startup Rain AI, Challenging Nvidia's Dominance

Exclusive | Sam Altman seeks investors for AI chipmaker that aims to challenge...

Sam Altman is personally pitching OpenAI investors on backing an upstart challenger to chipmaking giant Nvidia -- even as Nvidia reportedly ramps up its business ties with Elon Musk, The Post has learned. The OpenAI CEO is promoting an upcoming $150 million second round of financing that values Rain AI -- a fledgling manufacturer of high-performance semiconductors -- at roughly $600 million, according to a source with direct knowledge of the situation. Altman was a major investor in Rain AI's 2022 $25 million seed round, sources said. The latest round is expected to begin next month, the source said. "He has introduced the company to all his investors for this series B round," the source said of Altman. Rain AI says its chips are much more energy efficient and powerful than Nvidia's, sources said. In June, the company hired former Apple chip executive Jean-Didier Allegrucci as head of hardware engineering. OpenAI declined to comment. A Rain AI spokesman didn't immediately respond to requests for comment. Altman is pushing Rain AI at a time his rival Elon Musk is speaking to Nvidia about investing in his xAI, The Post reported exclusively earlier this month. Nvidia has a staggering 85% market share in the artificial intelligence chip space and has become the most valuable company in the world with a $3.5 trillion market cap. It is expected to continue to sell its chips to Open AI even if it invests with Musk. Still, insiders speculated that Altman has grown concerned that Nvidia's relationship with Musk is getting too cozy. Musk is expecting to soon spend billions to buy 100,000 Nvidia chips, CNBC reported. "Rain AI is one of the legitimate players at the table when it comes to the future of AI and chips," Wedbush Analyst Dan Ives told The Post. "There's a lot of buzz around everything Rain AI is doing and it's the early days of the AI revolution.," Ives added. "There's going to be many players, not just the 'Godfather of AI' Jensen Huang and Nvidia." "When you have someone like Altman backing [them] that puts them right in the middle of Times Square with a spotlight on them," he said. "Any company [Altman] backs is a huge vote of confidence and gives them a massive runway to where they can head."

OpenAI CEO Sam Altman Reportedly Leading $150M Funding For Rain AI: Startup Called 'One Of The Legitimate Players At The Table' To Challenge Nvidia - Microsoft (NASDAQ:MSFT), NVIDIA (NASDAQ:NVDA)

OpenAI CEO Sam Altman is reportedly leading a $150 million funding round for Rain AI, a semiconductor startup aiming to rival Nvidia Corporation NVDA in the AI chip market. What Happened: The funding, which would value Rain AI at around $600 million, follows Altman's participation in the company's $25 million seed round in 2022, reported the New York Post, citing sources with direct knowledge. The next funding round is slated to kick off next month. "He has introduced the company to all his investors for this series B round," the sources stated, referring to Altman. See Also: Sam Altman-Backed Startup Aims To Store Carbon Dioxide In Rocks, Shrinking Decades-Long Timeline To 'Single-Digit Months' In June 2024, Rain AI bolstered its leadership by hiring former Apple Inc. chip executive Jean-Didier Allegrucci as head of hardware engineering. Wedbush analyst Dan Ives has described Rain AI as "one of the legitimate players at the table when it comes to the future of AI and chips." "There's a lot of buzz around everything Rain AI is doing and it's the early days of the AI revolution," he said, adding, "There's going to be many players, not just the 'Godfather of AI' Jensen Huang and Nvidia." OpenAI and Rain AI did not immediately respond to Benzinga's request for comments. Why It Matters: Jensen Huang-led Nvidia is currently the world's most valuable company, with a market capitalization of $3.606 trillion. Analysts anticipate a "beat-n-raise" performance in Nvidia's third-quarter earnings, projecting revenue of $33.12 billion -- up sharply from $18.12 billion in the same period last year. The AI chip giant is set to announce its earnings on Wednesday, Nov. 20. Although Nvidia's new Blackwell AI chips are facing overheating concerns, the company's valuation is still anticipated to climb, fueled by the promise of its next-generation AI chip. I/O Fund analyst Beth Kindig predicted Nvidia could reach a $10 trillion valuation in September. Meanwhile, last month, Altman's OpenAI raised over $6.5 billion in new funding, boosting its valuation to $157 billion. The funding round was led by Thrive Capital and included major tech players such as Nvidia and Microsoft Corporation MSFT. Since 2019, Microsoft has invested about $14 billion in OpenAI. Price Action: Nvidia shares climbed 4.89% on Tuesday, closing at $147.01, and gained an additional 0.46% in after-hours trading, reaching $147.69 as of this writing, according to data from Benzinga Pro. Image via Shutterstock Read Next: Economics Professor Doubts Impact Of Dogecoin-Inspired, Elon Musk-Led Department On Federal Deficit, Cites This As Major Concern Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs