OpenAI Nears $500B Valuation via Employee Stock Sale, Tops Private AI Firms
OpenAI, the innovative force behind ChatGPT, is reportedly in advanced discussions to facilitate the sale of $6 billion in shares held by its current and former employees to a consortium of investors. Should the deal materialize, it would catapult the artificial intelligence pioneer to an estimated valuation of $500 billion, positioning it as the world’s most valuable privately held company, according to data compiled by start-up tracker CB Insights.
This potential transaction marks yet another dramatic surge in OpenAI’s valuation, which has seen remarkable growth in recent years. The San Francisco-based AI research lab was valued at $157 billion in October before climbing to $300 billion by March. That same month, the company secured an agreement with SoftBank and other investors for a new funding round projected to raise $40 billion by year-end. The current discussions involve a secondary market sale, where existing shares held by employees would be acquired by investors such as SoftBank and Thrive Capital. While talks are ongoing, the specific terms of the deal could still evolve.
The escalating valuation of OpenAI reflects a broader investment frenzy engulfing Silicon Valley’s artificial intelligence sector. Major tech giants including Meta, Google, Amazon, Microsoft, and OpenAI itself are pouring billions into recruiting top AI researchers and constructing the vast data centers and infrastructure required to power advanced AI development. This intense competition has ignited an insatiable appetite among investors. Venture capital deals for AI start-ups have already reached an impressive $129 billion this year through August 18, significantly surpassing the $106 billion recorded for the entirety of 2024, as reported by PitchBook.
The fervor extends beyond OpenAI. Databricks, a San Francisco-based company specializing in software that leverages AI for data storage and analysis, recently announced new funding that values it at over $100 billion, a substantial leap from its previous $62 billion valuation. Ali Ghodsi, co-founder and CEO of Databricks, revealed that the company hadn’t actively sought new capital but was inundated with inquiries from investors in the wake of Figma’s highly successful initial public offering last month, which saw the design software start-up achieve a $67.7 billion market capitalization on its first trading day. Ghodsi emphasized the perceived market opportunity, stating it would be unwise to defer such investment, though Databricks currently has no immediate plans for a public listing. Founded in 2013, the company had previously raised $19 billion from investors including Thrive Capital and Andreessen Horowitz, and has not yet disclosed the specific amount from its latest, still-unclosed funding round.
Despite its soaring financial prospects, OpenAI faces unique structural challenges. The company operates as an unusual hybrid of a nonprofit and a for-profit entity. For the past 18 months, it has been working to transition to a more conventional corporate structure, a move seen as a precursor to a potential public offering. However, this restructuring effort has encountered significant opposition. Elon Musk, one of OpenAI’s co-founders and now the head of rival AI firm xAI, is actively attempting to block the changes through a federal lawsuit. Furthermore, external parties have urged the attorneys general in California and Delaware, where OpenAI is headquartered and registered respectively, to intervene. These critics argue that the restructuring abandons OpenAI’s original nonprofit mission: to develop AI for the benefit of humanity, rather than for financial gain. Both attorneys general have confirmed they are monitoring the situation closely, highlighting the profound ethical and foundational debates swirling around the future of AI and the entities shaping it.