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Databricks closes in on multibillion funding round at $55 billion valuation

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Ali Ghodsi, co-founder and chief executive officer of Databricks Inc., speaks during a Bloomberg Technology television interview in San Francisco on Oct. 22, 2019.

David Paul Morris | Bloomberg | Getty Images

One of the world’s most valuable private tech companies is raising billions more in cash and is in no rush to go public, sources told CNBC. 

San Francisco-based Databricks is raising at least another $5 billion in its latest funding round — though it could raise up to $8 billion given the round is ongoing — according to several sources who asked not to be named because the discussions were private. The latest raise would value the company at $55 billion and could top the largest round of the year by OpenAI.

The latest funding is designed to help Databricks employees sell shares, a source said. Reducing pressure from employees to cash out also reduces the need for a liquidity event like an IPO. One source said the funding round makes Databricks’ highly anticipated public debut less urgent. But it could still happen in the back half of next year.

Databricks was founded in 2013 and sells software that helps enterprises organize data, and build their own generative AI products. It uses machine learning to help clients from AT&T to Walgreens parse through and make sense of massive troves of data. 

This equity round could be the largest in a banner year for artificial intelligence funding. One in three venture dollars this year has gone to an AI startup, according to CB Insights. OpenAI holds the record in 2024, raising $6.6 billion in October at a $157 valuation.

Databricks last raised $500 million at a $43 billion valuation. It’s backed by Nvidia, Capital One, Andreessen Horowitz, Baillie Gifford, Fidelity, Insight Partners, Tiger Global and others. 

The Information first reported that Databricks was raising money.

The firm has capitalized on the momentum in artificial intelligence. This summer, it acquired MosaicML, a $1.3 billion software startup that focuses on large language models that can churn out natural-sounding text. Databricks told investors earlier this year that annualized revenue would hit $2.4 billion by the midpoint of 2024.

Its decision to stay private comes as software stocks have struggled to get out of a rut brought on by higher interest rates. Shares of rival Snowflake are down 13% this year. While its fellow software IPO candidates like Stripe have taken significant haircuts on valuations, Databricks has grown its value while expanding its employee base. 

CEO Ali Ghodsi said at a conference last week that he’s optimizing for the success of Databricks over the next decade or two, not optimizing for an IPO.

“If we were going to go the earliest would be, let’s say, mid-next year, or something like that,” Ghodsi said at Newcomer’s Cerebral Valley AI Conference. “So, you know, could happen next year.”

A Databricks spokesperson declined to comment.

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Fed worried it could face ‘difficult tradeoffs’ if tariffs reaggravate inflation, minutes show

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Fed: Committee well-positioned to wait for more clarity on inflation and economic outlooks

Federal Reserve officials at their meeting earlier this month worried that tariffs could aggravate inflation and create a difficult quandary with interest rate policy, minutes released Wednesday show.

The summary of the May 6-7 meeting of the Federal Open Market Committee reflected ongoing misgivings about the direction of fiscal and trade policy, with officials ultimately deciding the best course was to keep rates steady.

“Participants agreed that uncertainty about the economic outlook had increased further, making it appropriate to take a cautious approach until the net economic effects of the array of changes to government policies become clearer,” the minutes stated. “Participants noted that the Committee might face difficult tradeoffs if inflation proves to be more persistent while the outlooks for growth and employment weaken.”

Though policymakers expressed concern about the direction of inflation and the vagaries of trade policy, they nevertheless that economic growth was “solid,” the labor market is “broadly in balance” though risks were growing that it could weaken, and consumers were continuing to spend.

As it has done since the last cut in December, the FOMC kept its benchmark federal funds rate in target between 4.25%-4.5%.

“In considering the outlook for monetary policy, participants agreed that with economic growth and the labor market still solid and current monetary policy moderately restrictive, the Committee was well positioned to wait for more clarity on the outlooks for inflation and economic activity,” the summary said.

The post-meeting statement noted that “uncertainty about the economic outlook has increased further. Also, the committee said that its ability to meet its dual goals of full employment and low inflation have increased due to policy uncertainty.

Since the meeting, officials have repeated that they will wait until there’s more clarity about fiscal and trade policy before they will consider lowering rates again. Market expectations have responded in kind, with futures traders now pricing in virtually no chance of a cut until the Fed’s September meeting.

Trade policy also has evolved since the Fed last gathered.

Tariffs and ongoing saber-rattling between the U.S. and China eased a few days after the central bank meeting, with both sides agreeing to drop the most onerous duties again each pending a 90-day negotiation period. That in turn helped kindle a rally on Wall Street, though bond yields continue to climb, something Trump has sought to contain.

Amid the trade war and signs that inflation is slowly coming in towards the Fed’s 2% target, Trump has hectored Fed officials to lower rates. Fed Chair Jerome Powell, though, has said the Fed won’t be swayed by political interference.

The meeting also featured discussion about the Fed’s five-year policy framework.

When officials last visited their long-range policy, they devised what became known as “flexible average inflation targeting,” which essentially asserted that officials could allow inflation to run above their 2% target for a while in the interest of promoting more inclusive labor market gains.

In their discussion, officials noted that the strategy “has diminished benefits in an environment with a substantial risk of large inflationary shocks” or rates aren’t near zero, where they had been in the years following the 2008 financial crisis. The Fed held interest rates near the lower boundary despite inflation surging following the Covid pandemic, forcing them into aggressive hikes later.

The minutes noted a desire for policy that is “robust to a wide variety of economic environments.” Officials also said they have no intention on altering the inflation goal.

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Vail Resorts, GameStop and more

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GameStop shares rise as retailer meme stock buys first bitcoin batch, scooping up $500 million

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A general view of the GameStop logo on one of its stores in the city center of Cologne, Germany.

Ying Tang | Nurphoto | Getty Images

GameStop said Wednesday it has officially bought 4,710 bitcoins, worth more than half a billion dollars, as the video game retailer began its crypto purchasing plan in a similar move made famous by MicroStrategy.

The purchase, its first investment in bitcoin, was worth $512.6 million with bitcoin’s price of $108,837 Wednesday. The world’s largest cryptocurrency has been on a tear lately, hitting a record high near $112,000 last week, as easing trade tensions and the Moody’s downgrade of U.S. sovereign debt highlighted alternative stores of value like bitcoin.

Shares of GameStop rose nearly 3% in premarket trading following the news. The meme stock is up about 12% this year. As of February 1, the company had amassed a $4.76 billion cash pile, according to its annual report released in April.

CNBC first reported on GameStop’s intention to add cryptocurrencies on its balance sheet in February. The company confirmed its plan in late March, saying it has not set a ceiling on the amount of bitcoin it may purchase.

GameStop is following in the footsteps of software company MicroStrategy, now known as Strategy, which bought billions of dollars worth of bitcoin in recent years to become the largest corporate holder of the flagship cryptocurrency. That decision prompted a rapid, albeit volatile, rise for Strategy’s stock.

GameStop’s foray into cryptocurrencies marks the latest effort by CEO Ryan Cohen to revive the struggling brick-and-mortar business. Under Cohen’s leadership, GameStop has focused on cutting costs and streamlining operations to ensure the business is profitable.

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