Microsoft is currently "in talks" to invest $10 billion in OpenAI, developer of the AI-powered conversational chatbot ChatGPT (opens in new tab) and AI image generator DALL-E (opens in new tab).

According to Semafor (opens in new tab), the cash infusion is part of a larger deal with OpenAI, in which Microsoft will get 75% of OpenAI's profits until it recoups its investment. After that, Microsoft will own a 49% stake in OpenAI.

This round of financing (including investment from other VCs) would value OpenAI at $29 billion, according to people familiar with the matter. It is unclear, however, whether the deal is final, but a document outlining the terms of the deal was sent to "prospective investors" late last year, they said.

ChatGPT is an AI chatbot that can give long-winded, conversational answers to open-ended questions. It can also write poems and jokes and give students essay outlines.

DALL-E is an AI image generator that creates images based on user input, such as "an oil painting of Batman eating a cheeseburger in front of a baby. I'm serious (opens in new tab).

The Information (opens in new tab) reported that Microsoft is looking to increase its stake in OpenAI since investing $1 billion in cash in 2019.OpenAI CEO Sam Altman said on Twitter (opens in new tab) that the average cost is "probably single digit cents per chat." He said they are trying to figure out how to be more precise and how to optimize. This was the case when ChatGPT launched last December and surpassed 1 million users.

A few cents per chat may not be a lot of money for OpenAI, but when you start chatting millions of times every day, it can be costly for startups. Microsoft can step in to optimize the back-end costs.

Last week, Microsoft announced that the March version of Bing (opens in new tab) will use the technology behind ChatGPT. Unfortunately for Microsoft, the most searched word on Bing last year was "Google" (opens in new tab)