OpenAI Pursues $500 Billion Valuation, Aiming for Tech Supremacy

OpenAI, the AI powerhouse backed by Microsoft, is in preliminary discussions for a potential stock sale that could elevate its valuation to approximately $500 billion. This move would nearly double its current valuation of $300 billion, reflecting the company’s rapid growth and solidifying its position among the world’s top private technology firms.

Rapid Growth and User Expansion

The proposed valuation jump underscores the extraordinary demand for advanced AI technologies and the competitive landscape for attracting top talent. OpenAI’s flagship product, ChatGPT, has been a significant contributor to this growth. In just seven months, the company has doubled its revenue, achieving an annualized run rate of $12 billion and targeting $20 billion by the end of the year.

The user base for ChatGPT has expanded dramatically, with weekly active users increasing to about 700 million from 400 million in February. This surge indicates widespread adoption across various sectors and regions, further heightening investor interest and setting the stage for the anticipated valuation leap.

SoftBank’s Major Investment

The discussions regarding a secondary share sale follow an earlier announcement of a $40 billion primary funding round led by Japan’s SoftBank Group. SoftBank is expected to contribute $22.5 billion to this funding round by the end of the year, with the remaining funds already secured at the $300 billion valuation. This substantial funding push highlights the appetite among global investors for opportunities in the AI sector, particularly with companies perceived as market leaders. Other notable investors, including Thrive Capital, are also in talks to participate in the employee share sale.

Potential to Overtake SpaceX

If OpenAI successfully reaches the $500 billion valuation, it would surpass SpaceX, currently valued at around $400 billion, becoming the most valuable privately held tech company globally. Achieving this milestone would further enhance OpenAI’s influence in the fast-evolving AI landscape and increase competitive pressure on its rivals to accelerate their innovation efforts.

Tech giants are already vying for top AI talent, often offering lucrative compensation packages to attract leading engineers and researchers. For example, Meta is reportedly investing billions in Scale AI to recruit its young CEO Alexandr Wang to lead a new superintelligence division.

Steps Towards an IPO

While OpenAI has not committed to an initial public offering (IPO), the company is restructuring its operations away from its current capped-profit model, which could set the stage for a future public listing. Chief Financial Officer Sarah Friar has indicated that a public offering will only occur when both the company and market conditions are favorable.

The proposed secondary sale could exceed the $1.5 billion employee stock sale conducted late last year, serving as a precursor to a public offering. This would allow the company to assess investor interest and reward employees without an immediate transition to public markets.

New AI Models Launched

In conjunction with the share sale discussions, OpenAI has introduced its first open AI models since the launch of ChatGPT. The new systems, gpt-oss-120b and gpt-oss-20b, are designed for developers to run locally and customize. Although these models are not fully open-source, they offer a more transparent alternative to OpenAI’s entirely closed systems.

According to CEO Sam Altman, these models exhibit reasoning capabilities comparable to some of OpenAI’s smaller commercial offerings and can operate on personal devices, depending on their size. Altman emphasized the significance of the gpt-oss models on social media, stating, “gpt-oss is a big deal,” and highlighted that the release was delayed to conduct additional safety testing. OpenAI performed internal trials with adversarial versions of the models to simulate potential misuse, including biosecurity risks, while sharing findings with external experts for review.

Leading the AI Revolution

The combination of soaring revenues, an expanding user base, and ambitious fundraising has positioned OpenAI as a leader in the private tech sector. By broadening its product range and pursuing one of the largest private valuations in history, OpenAI signals its intent to remain at the forefront of the AI revolution.

Whether the $500 billion valuation becomes a reality will depend on ongoing negotiations with investors in the coming months. Nevertheless, the prospect of such a valuation illustrates a market that continues to invest heavily in AI’s potential to transform industries and OpenAI’s capability to lead that change.