OpenAI may now hold the title of the world’s most valuable startup, surpassing Elon Musk’s SpaceX and ByteDance, the parent company of TikTok, following a secondary stock sale aimed at retaining employees at the ChatGPT maker.
Current and former OpenAI employees sold $6.6 billion in shares to a group of investors, boosting the privately held AI company’s valuation to $500 billion, according to sources familiar with the deal. Investors in the transaction included Thrive Capital, Dragoneer Investment Group, T. Rowe Price, as well as Japanese tech giant SoftBank and the UAE’s MGX.
The eye-popping valuation reflects growing optimism around AI technology and underscores OpenAI’s rapid rise from a nonprofit research lab founded in 2015 to a dominant force in generative AI. Yet the San Francisco-based company is not yet profitable, prompting some analysts to warn of a potential AI bubble if OpenAI and competitors fail to deliver on lofty expectations.
CEO Sam Altman has downplayed those concerns, emphasizing both the long-term potential of AI and the inevitability of short-term volatility. During a tour of a massive new data center in Abilene, Texas, Altman said, “Between the ten years we’ve already been operating and the many decades ahead of us, there will be booms and busts. People will overinvest and lose money, and underinvest and lose a lot of revenue.”
Altman added that while “we’ll make some dumb capital allocations” and face short-term ups and downs, the company remains confident that AI will drive a new era of economic growth, scientific breakthroughs, improved quality of life, and “new ways to express creativity.”
OpenAI has also been actively expanding its business offerings. This week, the company launched two new initiatives: a partnership with Etsy and Shopify enabling online shopping through ChatGPT, and a social media app, Sora, for generating and sharing AI-powered videos.
Competing with publicly traded tech giants has created challenges for OpenAI in attracting and retaining top talent. Meta Platforms, in particular, has aggressively hired elite AI engineers and invested $14.3 billion in AI company Scale in June, which recruited its CEO Alexandr Wang.
Technically, OpenAI’s for-profit subsidiary—now valued at $500 billion—is governed by the board of its nonprofit parent and remains bound to pursue the nonprofit’s charitable mission, blending profit with purpose in a unique corporate structure.
Pump Radar
Stock Alerts