OpenAI Eyes IPO: Could It Be the Largest Ever?

Sources familiar with the matter suggest that OpenAI, the developer of the ChatGPT AI model, is seriously considering an initial public offering (IPO). This move, if realized, could value the company at a monumental $1 trillion, making it one of the largest IPOs in history.

Potential Timeline and Preliminary Estimates:

According to some insiders, OpenAI is expected to submit a formal application to regulators by the second half of 2026. However, other reports indicate that 2027 is a more likely timeframe. In the initial stages of discussions, preliminary estimates for the required funding range from $60 billion upwards. It's important to note that these figures are still under review and may be subject to change based on the company's financial performance and overall market conditions.

Official Statements and Reactions:

The company's CFO, Sarah Friar, has reportedly told some colleagues that the company's plan includes an IPO in 2027. On the other hand, some advisors believe that this could happen sooner, perhaps by the end of 2026. In contrast, an OpenAI spokesperson stated that an IPO is not currently a top priority for the company, and therefore no firm date has been set. However, the company's CEO, Sam Altman, has indicated in public statements that an IPO is the most likely path given the company's future funding needs.

Why an IPO Now?

The preparation for an IPO reflects a new sense of urgency within OpenAI. After completing a complex restructuring and reducing reliance on Microsoft, the company is seeking to access capital markets more efficiently and use public equity for large-scale acquisitions. This aims to support Sam Altman's ambitious plans, which include investing trillions of dollars in developing AI infrastructure.

Financial Performance and Current Valuation:

Estimates suggest that OpenAI's annualized revenue will reach approximately $20 billion by the end of the year. However, the scale of losses is continuously increasing. The company's current valuation is around $500 billion.

Company Structure and Reorganization:

OpenAI was originally founded as a non-profit organization in 2015. A few years later, the company restructured itself so that a non-profit foundation oversees the for-profit division. This structure aims to ensure that AI is developed safely and responsibly, not just for profit. Recently, OpenAI reorganized itself again, with the non-profit foundation now known as the "OpenAI Foundation" and holding 26% of the shares of the OpenAI Group, with the right to receive additional shares upon achieving specific milestones.

Potential Beneficiaries:

If the IPO is successful, it will bring significant benefits to existing investors such as SoftBank, Thrive Capital, and Abu Dhabi's MGX. Microsoft is the largest shareholder in the company, having invested $13 billion and owning approximately 27% of the shares.

AI Drives the Market:

This preparation coincides with the significant rise in global stock markets driven by artificial intelligence. Earlier this year, AI cloud computing company CoreWeave went public with a valuation of $23 billion, and its share price has roughly tripled since then. This week, Nvidia became the first company to exceed a market capitalization of $5 trillion, further solidifying its pivotal role in the global AI wave.