OpenAI Wins $200 Million US Defense Contract For AI Warfare Capabilities As The Company Looks To Raise $40 Billion
OpenAI has secured a $200 million defense contract to develop artificial intelligence capabilities for national security applications, according to contracts released by the Department of Defense on Monday.
What Happened: The Chief Digital and Artificial Intelligence Office awarded the fixed-amount prototype agreement for “frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains,” the Pentagon stated. Work will be performed primarily in the National Capital Region through July 2026.
The contract represents OpenAI’s largest known government deal as the company simultaneously pursues a $40 billion funding round led by SoftBank Group Corp (OTC:SFTBY). Reuters reported that Saudi Arabia’s Public Investment Fund and India’s Reliance Industries could each contribute several hundred million dollars to the financing.
OpenAI’s revenue growth has accelerated dramatically, reaching a $10 billion annualized run rate in June, nearly doubling from $5.5 billion at 2024’s end, according to company statements. The figure excludes Microsoft Corp. (NASDAQ:MSFT) licensing revenue and one-time deals.
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Why It Matters: ChatGPT usage has surged to 500 million weekly active users as of March, driving the revenue expansion. The company targets $12.7 billion in 2025 revenue after posting a $5 billion loss in 2024.
The defense contract coincides with OpenAI’s complex $300 billion corporate restructuring into a public-benefit corporation. Delaware’s attorney general is independently valuing the nonprofit parent’s equity stake, while Microsoft disputes its ownership percentage in the new structure.
OpenAI faces a year-end deadline to complete the restructuring or risk losing up to $20 billion from SoftBank. The funding supports AI model development and the $100 billion Stargate infrastructure project, featuring Oracle Corp. (NYSE:ORCL) and Nvidia Corp. (NASDAQ:NVDA) GB200 chips, at facilities in Texas.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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