TheChek News Flow

We think it’s more likely the company will raise more funding privately before it goes public.

There’s a solid history of companies raising large slugs of cash in the year or two leading up to the IPO, often from the kinds of public market investors that also buy into the listing. In OpenAI’s case, it already has several of these public market investors, including T. Rowe Price and Fidelity Management.

I’m sure there’s demand from other deep-pocketed investors too. For instance, OpenAI previously held conversations with Saudi Arabia’s Public Investment Fund and multinational conglomerates such as India’s Reliance Industries about potential funding, we’ve reported.

As for what happens in 2027, an IPO seems like a decent bet. Earlier this year, as OpenAI was lining up investors to buy employee shares at a $500 billion valuation, its executives told some investors it expects to raise nearly $90 billion in capital in 2027 alone, according to a person with knowledge of the projections. In theory, that could include capital from an IPO.

OpenAI had about $9.6 billion in cash at the end of June, according to financial disclosures to shareholders, and the board of lead investor SoftBank recently approved its $22.5 billion investment in OpenAI’s $41 billion fundraise. That means OpenAI has more than enough money to get to 2027, considering the roughly $26 billion it had projected to burn through the end of next year.

For OpenAI, the cash is necessary to feed its ever-growing server needs, which it projects will total nearly $125 billion over the next three years and will be a key factor in its projected cash burn of $115 billion through 2029.

Pre-IPO funding rounds also serve another purpose: drumming up demand from investors that straddle both private and public investing and are looking for a quick valuation jump. They can also give investors a close look at a company’s financials—including problems that could thwart a successful IPO, such as a concentration of too many sales with one customer.

But OpenAI will still need to run the gauntlet of requirements for a public listing, including establishing a regular quarterly reporting schedule and ensuring that its financials meet public transparency standards.

The company also will likely need to address some unusual risks facing its investors. For instance, the OpenAI Foundation’s board can name and remove the OpenAI corporation's board, and the corporation’s board can only consider the mission to benefit humanity, not the interests of shareholders, when it comes to safety and security issues.

And if the company hits a $5 trillion valuation after 15 years, the nonprofit could also gain additional shares through warrants, giving it a single-digit percentage of incremental ownership over time worth hundreds of billions of dollars, according to two people with knowledge of OpenAI’s plans.

One factor that smoothed the way for the restructuring was the $500 billion valuation, which was much higher than the round led by SoftBank that valued it at $300 billion. That’s because OpenAI, Microsoft and their bankers (Goldman Sachs and veteran banker Michael Klein for OpenAI, Morgan Stanley for Microsoft) agreed to value the stakes using the Black-Scholes option pricing model. That takes into account the spot price (the current value of OpenAI) as well as the company’s potential future value, said a person with knowledge of the discussions.

When OpenAI was worth $300 billion, Microsoft’s 27% stake would have been worth just $81 billion, giving it an incentive to push for a higher percentage of equity. At the $500 billion valuation, the 27% stake is worth $135 billion. No doubt that seemed a lot more palatable to Microsoft.

In this case, OpenAI showed that its ability to sell shares to investors solves many problems. A future IPO will test that ability again.

Funding would support the development of satellites for President Trump’s Golden Dome project

SpaceX is set to receive $2 billion to develop satellites that can track missiles and aircraft under President Trump’s Golden Dome project, people familiar with the matter said.

The funding was included in the tax-and-spending bill that Trump signed in July, but wasn’t publicly linked to a contractor. The planned “air moving target indicator” system could eventually field as many as 600 satellites, some of the people said.

The Elon Musk-led company is expected to play a major role in two other Pentagon satellite networks, according to people familiar with the situation. One, called Milnet, would relay sensitive military communications, while the other involves satellites capable of tracking vehicles on the ground, the people said.

The traction that SpaceX has gained with the coming satellite fleets is another sign of the company’s growing influence in U.S. national security.

Government officials have described Golden Dome as a complex system of satellites and other technologies that are capable of destroying missiles before they hit their targets. The Pentagon has released few specifics about how the missile shield would work.

Defense officials haven’t awarded major contracts for Golden Dome while they set its spending plans. Lawmakers and industry executives are expecting more details from the Pentagon about Golden Dome in the coming weeks.

A Pentagon spokesperson declined to comment on SpaceX’s involvement in the planned satellite systems: “We do not provide details relating to specifics of architectural discussion or predecisional matters.”

SpaceX didn’t respond to a request for comment.

Musk’s space company, known for its rocket launches, has built a big satellite business serving military and intelligence agencies. Officials have praised SpaceX’s prowess at advancing technologies for national security and rapidly deploying satellites.

“What we’re relying on is industry to help us innovate by showing us the art of the possible—bringing ideas to us,” Gen. Chance Saltzman, the top operations official at the Space Force, said at an industry event last year.

The Wall Street Journal reported in February that SpaceX, along with the defense technology companies Anduril Industries and Palantir Technologies, had pitched their services to help develop Golden Dome’s infrastructure on a fast timeline. Traditional defense contractors such as Lockheed Martin, Northrop Grumman and L3Harris are also proposing technologies for the shield.

Trump has said Golden Dome would cost $175 billion, though analysts estimate it would cost hundreds of billions more.

The president has pushed for the system to operate by the end of his term. The brisk timeline offers SpaceX an edge in securing work on the project because the company can manufacture and launch satellites more quickly than rivals, according to government and industry officials.

SpaceX recently said it had launched more than 10,000 satellites for its Starlink internet service. Starlink’s rapid growth has made it the largest satellite fleet in history.

Breaking Defense earlier reported on SpaceX’s involvement in Milnet.

The Milnet system has been under development for several years and involves both the Space Force and the National Reconnaissance Office, the U.S. spy agency focused on classified satellites. The NRO, which hired SpaceX several years ago to develop and launch a swarm of intelligence satellites, didn’t respond to a request for comment.

Many military leaders and lawmakers are leery of threading too many national-security satellite networks through SpaceX, fearing the U.S. would become overly dependent on the company.

Sen. Rick Scott (R., Fla.) recently said he would keep pushing for competition as Trump’s missile shield takes shape. “I don’t want to end up where we pick one company and we go down a path,” he said, without naming any company.

Inside the Defense Department, leaders call such a scenario “vendor lock.” Those situations can “negate the strengths of the market by stifling innovation and inflating prices,” the Defense Science Board, a technical advisory group for the Pentagon, said last year in a report about commercial space.

Government officials said some of Musk’s actions have reinforced the need to have several contractors supporting national-security operations in space. One example: his threat to decommission a spacecraft that transports National Aeronautics and Space Administration astronauts to the International Space Station.

Musk walked back the threat, and SpaceX executives have often pointed to the company’s close relationships with government officials and agencies.

“The government will get what they need—just like always,” SpaceX President Gwynne Shotwell said at an investor event last year, discussing how the company would dedicate Starlink internet to the U.S. in the event of a conflict.

The Defense Department has taken steps to spur the broader satellite industry. The Space Development Agency is fielding another military satellite network using companies like York Space Systems and Boeing.

Sotheby’s plans to kick off bids for Maurizio Cattelan’s 18-karat masterpiece at $10 million; no sitting on this throne

An artist sculpted a toilet out of 223 pounds of gold, a weight valued at about $10 million in current gold markets. Sotheby’s is betting it can auction off the golden bowl for even more.

The 18-karat toilet was created by Maurizio Cattelan, the same impish artist behind last year’s $6.2 million duct-tape banana.

Next month, the auction house will set its starting bid for Cattelan’s fully functioning toilet at the $10 million mark, or whatever the daily rate in gold markets would be for a 101.2-kilogram chunk on the day of the sale, Nov. 18. But watch this throne: Sotheby’s expects it to serve as a rare and wry test of art’s appeal beyond its material worth as a precious metal. Cryptocurrency will also be accepted.

Just don’t try before you buy. Ahead of the sale, Sotheby’s expert David Galperin said the house will install the golden loo in a fourth-floor bathroom within its new Manhattan headquarters. Potential bidders will be allowed to see it in situ, he said, but they won’t be allowed to use it.

“We don’t want people sitting on the art,” Galperin said.

Cattelan is known for making sculptures that explore social and historical taboos. The Italian artist’s 2016 commode has a storied history that predates last year’s banana bonanza, when his fruit duct-taped to a wall, “Comedian,” caused a pop-culture stir and even buoyed confidence in the slumping art market after selling for quadruple its $1.5 million high estimate.

“It’s the perfect sequel to the banana, even though he made it earlier,” Galperin said of Cattelan’s toilet.

The artist initially intended to create five matching versions of his toilet, which he titled “America” as a way to question which spaces in a museum get deemed sacred versus profane.

Cattelan said Thursday he wanted to put something shiny and expensive in an overlooked spot. “In the end, we are all the same,” he said, “and we remember it right there, in the least noble and most necessary place.”

The first example was installed in a bathroom at New York’s Guggenheim Museum in 2016.

The piece proved an immediate hit, with critics comparing it to ready-made master Marcel Duchamp’s 1917 porcelain urinal, “Fountain.” A steady stream of 100,000 visitors lined up to see—and use—Cattelan’s creation. A museum guard stood outside the bathroom, and janitors cleaned the piece every 15 minutes or so.

Rising gold prices also played a role in its lore.

During its initial run at the Guggenheim, the piece was said to be worth about $2 million. Three years later, the Guggenheim sent its commode to England’s Blenheim Palace, where it was installed in Winston Churchill’s wood-paneled bathroom. By that time, gold prices had climbed and the piece was worth at least $4 million.

One night in 2019, thieves wielding sledgehammers broke into Blenheim, ripped out the toilet and fled with it, causing flooding issues at the 18th-century home. Several men were later arrested for the crime.

Meta, Alphabet, Microsoft and Amazon will increase spending in 2026; ‘Are we in a bubble?’

Silicon Valley’s largest companies plan to invest $400 billion in AI this year, with many indicating this is insufficient.

Meta, Alphabet, Microsoft, and Amazon will increase 2026 spending; Google and Amazon shares rose, while Meta and Microsoft shares fell.

Google’s CFO stated that AI investments are already generating billions of dollars in revenue for the company.

Silicon Valley’s biggest companies are already planning to pour $400 billion into artificial intelligence efforts this year. They all say it’s nowhere near enough.

Meta Platforms META -11.33%decrease; red down pointing triangle says it is still running up against capacity constraints as it tries to train new AI models and power its existing products at the same time. Microsoft MSFT -2.92%decrease; red down pointing triangle says it is seeing so much customer demand for its data-center-driven services that it plans to double its data-center footprint in the next two years. And Amazon.com AMZN -3.23%decrease; red down pointing triangle says it is racing to bring more cloud capacity online as soon as it can.

“We’ve been short [on computing power] now for many quarters. I thought we were going to catch up. We are not. Demand is increasing,” said Amy Hood, Microsoft’s chief financial officer. “When you see these kinds of demand signals and we know we’re behind, we do need to spend.”

Meta, Alphabet GOOGL 2.52%increase; green up pointing triangle, Microsoft and Amazon have all told investors over the past 48 hours that they will increase spending in 2026. Investors gave their blessing to plans laid out by Google and Amazon, with some worrying about those set forth by Meta and Microsoft.

Meta shares closed down 11% on Thursday, and Microsoft’s shares fell by nearly 3%. Google and Amazon shares rose by roughly 6% and 10%, respectively, in after-hours trading.

The mixed signals from investors are rooted in uncertainty about where the outsize spending will ultimately lead. The companies and a variety of AI boosters say the investments are necessary for machine-learning systems to reach artificial general intelligence, or AGI, a state in which they are smarter than humans.

“Whoever gets to AGI first will have an incredible competitor advantage over everybody else, and it’s that fear of missing out that all these players are suffering from,” said Youssef Squali, lead internet analyst at Truist Securities. “It’s the right strategy. The greater risk is to underspend and to be left with a competitive disadvantage.”

But skeptics have cast doubt on whether spending billions on large-language models, the most popular AI systems, will ever lead to that goal. They also point to the small number of paying users for existing technology and the need for years of training before many workers around the world will be able to effectively put it to use.

Analysts peppered executives with pointed questions on the investor calls that took place after the earnings results were announced. On Microsoft’s call, one analyst asked the question seemingly on everyone’s mind: “Are we in a bubble?” On Google parent Alphabet’s call, another asked: “What early signs are you seeing that gives you confidence that the spending is really driving better returns longer term?”

Google, which said its capital expenditures for the full year would jump from $85 billion to $91 billion to $93 billion, said the investments were already paying off.

“We already are generating billions of dollars from AI in the quarter. But then across the board, we have a rigorous framework and approach by which we evaluate these long-term investments,” said Anat Ashkenazi, Google’s chief financial officer.

Microsoft said it would be operating with not enough capacity to power both its current businesses and AI research to the extent needed through at least the first half of next year, and that its cloud computing business, Azure, is bearing “most of the revenue impact.”

Amazon told investors that it is moving as quickly as it can to bring new capacity online because it can make money off those investments immediately.

“You’re going to see us continue to be very aggressive in investing capacity because we see the demand,” said Amazon Chief Executive Andy Jassy. “As fast as we’re adding capacity right now, we’re monetizing it.”

Meta didn’t offer fresh details about AI model release or product timelines, or when investors would more broadly see returns on their investments, spooking some. In after-hours trading Wednesday, after its earnings call, Meta shares dropped more than 7%.

If the company is wrong about how much money it is spending to reach AGI, it will simply pivot, Meta Chief Executive Mark Zuckerberg told investors on its call Wednesday.

“I think it’s the right strategy to aggressively front load building capacity. That way, we’re prepared for the most optimistic case,” he said. “In the worst case, we would just slow building new infrastructure for some period while we grow into what we build.”

Zuckerberg also said that Meta’s current ads business and platforms are running in a “compute-starved state” while the company gives more resources to AI research and development efforts instead of shoring up existing operations.

Its capital expenditures—which already nearly doubled from last year to $72 billion this year—will grow “notably larger” in 2026, Meta CFO Susan Li said, without providing specific numbers.

Apple said on its earnings call that it is also increasing investments in artificial intelligence. But its total spending still pales in comparison to the amount the other tech giants are laying out.