OpenAI quickly became the leading company in artificial intelligence (AI) when ChatGPT was launched and jumped on the AI race a little over three years ago. The average investor has not been able to invest directly in the company, but that may change soon, as OpenAI is expected to have its initial public offering (IPO) later this year.
Even if you are a regular ChatGPT user, you may not know some of the details about the company. So, here are five things potential investors should know before the OpenAI IPO.
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More and more reports are suggesting that its stock could go live as soon as the fourth quarter of this year. That timeline isn’t set in stone, of course, but the company has made other moves that indicate it’s getting closer to an IPO, such as expanding its finance team to include an employee dedicated to investor relations and refocusing on its core ChatGPT product.
OpenAI is reportedly targeting a $1 trillion valuation, and the company’s latest funding round — the largest in Silicon Valley history — raised $122 billion for the company and valued the company at $852 billion. Some of OpenAI’s biggest investors from the latest funding round were Softbank, Amazonagain Nvidia (NASDAQ: NVDA). Aside from its investment in OpenAI, Nvidia has benefited from increased demand for its processors due to OpenAI data center infrastructure needs and tech companies trying to keep up with the AI race.
OpenAI has reportedly told potential investors that it will generate $280 billion in annual revenue by 2030. Those sales are expected to come from both the company’s business and commercial products.
The company had just $13.1 billion in sales last year, and OpenAI said recently that nearly half of its sales by 2026 will come from its enterprise customers.
It’s worth noting here, too, that OpenAI doesn’t expect to have a positive cash flow until 2029.
ChatGPT’s 900 million every week active users are far and away leaders in the chatbot race, and the company is making big strides in paid subscribers and business accounts — ChatGPT has 50 million paying customers and 9 million paying business users.
OpenAI rival Anthropic didn’t release details on how many paid subscribers Claude’s company’s chatbot has, but a spokesperson recently told TechCrunch that Claude’s paying subscribers have more than doubled this year.
Technology companies have spent a lot of money recently to build state-of-the-art data centers. For example, Alphabets, Meta PlatformsMicrosoft, and Amazon say they will spend $650 billion in capital expenditures this year, most of which will go to AI.
OpenAI CEO Sam Altman said late last year that his company had $1.4 billion in AI infrastructure commitments, but as investors have grown concerned about how much money companies are spending on AI, OpenAI has scaled back spending.
Recently, the company said that it will spend 600 billion dollars in total computing by 2030. That’s still a lot of money, and it will put pressure on the company to ensure that revenue grows quickly after going public.
A recent Bloomberg report said Anthropic is considering going public in October, which would likely put the company’s IPO at the same time, or earlier, than OpenAI. The company is reportedly looking to raise $60 billion, which would be more than the $30 billion it raised in a funding round in February, where tech giants, including Nvidia, participated in the round.
It may seem strange that Nvidia would invest in both OpenAI and Anthropic, but the company made a strategic decision to invest in both AI companies to help fuel demand for processors as they grow and attract more users.
Although Anthropic does not have as many users as OpenAI, it has been growing in the enterprise market with its popular Claude Cowork tool. It also drew the attention of users after the Pentagon abandoned its use of Claude following Anthropic’s refusal to meet other government demands.
Some AI users now view Anthropic as an anti-government company, while OpenAI quickly swept in and struck a deal with the Pentagon a few days later. That could complicate the two companies’ IPOs if some investors view Anthropic as more fair than OpenAI.
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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Alphabet, Amazon, Meta Platform, Microsoft, and Nvidia. The Motley Fool has a policy of disclosure.
5 Things You Should Know About OpenAI Before Its IPO Published by The Motley Fool
