OpenAI is included confidential documents for an initial public offering, the company announced on Monday, beginning what could be a months-long process to be listed on the US stock exchange. The move makes it the third company to file for a potential multi-billion dollar IPO this year.
Tech companies pursuing more 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 expand their services.
The IPO will be another fundraising opportunity for OpenAI after the company privately raised $122 billion in March. Transparency, which brings more employees closer to a life-changing payday and increases transparency about a business’s financial health, may also boost employee morale and customer confidence as OpenAI tries to regain its position as a clear leader on the AI frontier.
OpenAI did not specify the timing of the IPO or how much it plans to raise. “We just filed a confidential S-1,” the company said in an unsigned, one-paragraph blog post. “We expect it to leak so we’re just announcing it. We haven’t decided on a time yet; it could be a time because there are things we want to do that may be easier as a private company. But it’s a complex set of transactions and this gives us the option to go public sooner if that ends up being better.”
OpenAI declined to comment further. But by getting the paperwork ready, the company could set up a potentially successful debut for Anthropic. If a competitor runs into any challenges, OpenAI can catch up and rebalance.
A Three Way Race
Anthropic, founded in 2021 by former OpenAI employees, filed its confidential IPO papers on June 1. A few days before the filing, Anthropic’s latest fundraising raised its value to $965 billion, surpassing OpenAI’s $852 billion mark—both record-breaking figures in the venture capital world. Elon Musk’s SpaceX, which builds rockets, sells satellite internet, and also develops some of the world’s most talented AI models, filed its IPO documents publicly last month.
IPOs can value each of these companies in excess of $1 trillion despite the fact that they are all unprofitable and have roughly 80 percent to 90 percent of the market share of nearly all trillion dollar public companies in existence. The only IPO to break the $1 trillion mark was oil company Saudi Aramco in 2019.
OpenAI’s revenue from subscriptions, ads, and service fees grew to somewhere between $10 billion and $20 billion last year, according to the company’s previously disclosed data. But it spent too much money on cloud computing and thousands of employees, resulting in billions of dollars in losses. In the past months, the company has made several changes due to high infections and an effort to focus on fewer projects.
OpenAI executives debated for months whether the company was ready to go public, according to two people familiar with the matter who were not authorized to discuss private details. At one point last year, OpenAI was eyeing 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 getting involved in AI companies as they go public. OpenAI has discussed the idea for months as a way to expand the public benefits of AI development, according to one of the people familiar with the company’s discussions. An OpenAI blog post put together by CEO Sam Altman on Monday said that “a bright future for AI” requires “more people, companies, communities, and countries to be able to build, gain, and hold power.”
Legal challenges
In 2019, OpenAI created a for-profit company that allowed it to raise much more money than it believed people would be willing to donate. Today, the nonprofit owns about 25 percent, or more than $200 billion, of the company. It also has the power to block major business decisions and fire company executives. Reversing a nonprofit is a legal challenge.
Recently, OpenAI cleared a major hurdle on the road to its IPO by winning a lawsuit brought by Musk, who accused the maker of ChatGPT of deviating from its nonprofit mission. Musk’s claims were dismissed last month after a federal judge and jury ruled that he filed his lawsuit too late.
