OpenAI Eyeing $500bn Valuation via Share Sale, Outpacing SpaceX
OpenAI is reportedly in discussions with investors for a share sale that could value the artificial intelligence company at a staggering $500 billion. This valuation would propel the ChatGPT maker past Elon Musk's SpaceX, positioning it as the world's most valuable private technology group.
The proposed valuation represents a significant increase from OpenAI's current financing round, a $40 billion investment led by SoftBank that valued the company at $300 billion. If the new talks materialize, OpenAI's valuation would nearly double from its ongoing funding efforts, surpassing SpaceX, which was recently valued at $400 billion.
The discussions revolve around a secondary stock sale, a mechanism designed to allow current and former OpenAI employees to divest their shares. While the precise valuation for these employee share sales remains unfixed and the volume of stock sold will depend on investor demand, sources indicate this secondary offering is likely to be considerably larger than the $1.5 billion stock sale OpenAI conducted late last year. Both OpenAI and Thrive Capital, reportedly among the investors involved, declined to comment on the matter. The talks were first reported by Bloomberg.
These ongoing discussions highlight the intense investor appetite for artificial intelligence, fostering an unprecedented funding environment for companies at the forefront of AI development and application. Investors are actively seeking out promising startups, driven by the belief that a dominant player in this nascent field could eventually command a multi-trillion dollar valuation.
Since the introduction of its widely popular ChatGPT chatbot in late 2022, OpenAI has seen its annual recurring revenue (ARR) – a key measure of expected subscription-based income commonly used by startups – surge to an estimated $12 billion. The company further forecasts its ARR to reach $20 billion or more by the close of 2025. However, despite this rapid revenue growth, OpenAI, much like its close competitor Anthropic, remains unprofitable. This is largely attributed to the immense computational costs associated with training and operating the most advanced AI models. Anthropic, for its part, has quadrupled its ARR to $4 billion this year and is reportedly in talks to raise at least $5 billion at a valuation of $170 billion.
The broader technology sector has also felt the ripple effect of the AI boom, with major tech companies adding hundreds of billions of dollars to their market capitalization recently, spurred by commitments to increase their investment in AI. The competition among these entities is fierce, as they vie for customers utilizing tools capable of generating text, code, or images from user prompts. In recent developments, Anthropic announced an update this week to enhance the coding performance of one of its leading models, while OpenAI unveiled "open-weight" models, which are free for developers to access and customize. OpenAI is also anticipated to release its highly awaited GPT-5 model later this month.