Tech companies pursuing the most powerful AI models, including publicly traded giants Alphabet, Amazon, Meta and Microsoft, are hungry for tens of billions of dollars each to build more data centers and recruit scientists to enhance their services.
The IPO would be another fundraising opportunity for OpenAI after the company raised $122 billion privately in March. Going public, which brings many employees closer to a life-changing payday and increases transparency about the financial health of the business, could also boost employee morale and customer confidence as OpenAI tries to regain its position as the clear front-runner in frontier AI.
OpenAI did not specify timing for the IPO nor say how much it plans to raise. “We recently filed a confidential S-1,” the company said in an unsigned, one-paragraph blog post. “We expect it to leak out so that’s why we’re announcing it. We haven’t decided on timing yet; it may take some time because there are things we want to do that might be easier as a private company. But it’s a complex set of tradeoffs and it gives us the option of going public sooner if that’s best.”
OpenAI declined to comment further. But by getting the paperwork in place, the company can craft a potentially successful launch by Anthropic. If an opponent encounters a challenge, OpenAI can pause and recalibrate.
a three way race
Anthropic, which was founded in 2021 by former OpenAI employees, filed its confidential IPO paperwork on June 1. Just days before the filing, Anthropic’s latest fundraising brought its valuation to $965 billion, surpassing OpenAI’s $852 billion mark – both record-breaking figures in the world of tech venture capital. Elon Musk’s SpaceX, which builds rockets, sells satellite internet, and also develops some of the world’s most capable AI models, publicly filed its IPO documents last month.
An IPO could value each of these companies at more than $1 trillion, despite them all being unprofitable and having sales roughly 80 percent to 90 percent lower than almost every existing trillion-dollar public company. In 2019, oil company Saudi Aramco was the only IPO to break the $1 trillion mark.
OpenAI’s revenue from subscriptions, advertising and service fees grew to between $10 billion and $20 billion last year, according to previous company disclosures. But it spent far more money on cloud computing and thousands of employees, leading to billions of dollars in losses. In recent months, the company has undergone several restructurings due to executive illnesses and an effort to focus on fewer projects.
OpenAI executives have debated for months whether the company is ready to go public, according to two people familiar with the matter but not authorized to discuss confidential information. At one point last year, OpenAI was aiming for an IPO in late 2027 or early 2028, according to another person familiar with the discussions.
Last week, President Donald Trump said his administration would look into the possibility of the US government taking stakes in AI companies if they go public. OpenAI has discussed the idea for months as a way to broaden the public benefits of AI development, according to one of the people familiar with company discussions. An OpenAI blog post co-written by CEO Sam Altman on Monday said that “a good AI future” requires that “many people, companies, communities, and countries can build, leverage, and seize power.”
legal challenges
In 2019, OpenAI created a for-profit subsidiary to allow it to raise more money than it believed people would be willing to donate. Today, the nonprofit owns about 25 percent of the company, or more than $200 billion. It also has the power to block major business decisions and dismiss company officials. Dissolving a nonprofit is legally challenging.
Recently, OpenAI overcame a major hurdle on the way to its IPO by defeating a lawsuit brought by Musk, which accused the ChatGPT-maker of deviating from its non-profit mission. Musk’s claims were dismissed last month after a federal judge and jury ruled that he filed his lawsuit too late.
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