Thinking Machines, the AI lab founded by former OpenAI CTO Mira Murati, is reportedly in talks to raise $1 billion at a valuation of at least $40 billion, according to The Information. Accel is said to be leading the fundraise, which would value the company below the $50 billion valuation sought in the previous year.

The startup’s Inkling, an open-weight model that charges usage-based fees, has been generating revenue. However, with a $100 million annual revenue run rate, a $40 billion valuation seems unusually high, reflecting the risks and rewards of cutting-edge AI.

Thinking Machines’ prior fundraise, a $2 billion round, valued the company at $12 billion, backed by investors including Andreessen Horowitz and Nvidia. This new round could be seen as either a continuation of the funding frenzy propelling the AI sector or a case of investors chasing the next big thing.

Despite its promising potential, the company has seen several high-profile departures, including co-founders Lilian Weng and Luke Metz, who returned to OpenAI. These exits might raise questions about the company’s stability and long-term prospects.