OpenAI has submitted an application confidential documents regarding the initial public offering – the company announced on Monday, starting a multi-month process leading to a debut on the American stock exchange. The move will make it the third company to file for a trillion-dollar IPO this year.
Technology companies using the most powerful artificial intelligence models, including publicly traded giants Alphabet, Amazon, Meta and Microsoft, need tens of billions of dollars each to build more data centers and recruit scientists to develop their services.
An initial public offering 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 a company’s financial health, could also boost employee morale and customer confidence as OpenAI tries to regain its position as the clear leader in pioneering artificial intelligence.
OpenAI has not specified an IPO date or the amount it plans to raise. “We recently filed a confidential S-1 filing,” the company says he said in an unsigned, one-paragraph blog post. “We expect it to leak, so we’re just announcing it. We haven’t set a date yet. It may take some time because there are things we want to do that will probably be easier as a private company. But it’s a complicated set of trade-offs and gives us the opportunity to go public sooner if that proves best.”
OpenAI declined to comment further. However, with the documentation ready, the company could prepare for a potentially successful Anthropic debut. If a rival encounters any challenges, OpenAI can pause and recalibrate.
A three-way race
Anthropic, founded in 2021 by former OpenAI employees, filed confidential documents for an initial public offering on June 1. Just days before the filing, Anthropic’s latest fundraising boosted the company’s valuation to $965 billion, surpassing OpenAI’s $852 billion mark – a record high in the world of tech venture capital. Elon Musk’s SpaceX, which makes rockets, sells satellite internet and develops some of the world’s most powerful artificial intelligence models, publicly filed IPO documents last month.
IPOs could value each of these companies at more than $1 trillion, even though they would all be unprofitable and have approximately 80 to 90 percent lower sales than almost every existing trillion-dollar public company. The only IPO to exceed $1 trillion was oil company Saudi Aramco in 2019.
OpenAI’s revenue from subscriptions, advertising and service fees rose to between $10 billion and $20 billion last year, according to previous company disclosures. But it spent much more money on cloud computing and thousands of employees, leading to billions in losses. In recent months, the company has carried out several restructurings due to management illnesses and an attempt to focus on fewer projects.
OpenAI executives have been debating 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 planning an initial public offering in delayed 2027 or early 2028, according to another person familiar with the discussions.
Last week, President Donald Trump said his administration would consider allowing the U.S. government to take a stake in artificial intelligence companies after they go public. OpenAI has been discussing the idea for months as a way to augment public benefits from AI development, according to one person familiar with company discussions. Monday’s OpenAI blog post, co-authored by Altman, said that a “vibrant future of artificial intelligence” requires that “multiple people, companies, communities and countries can build, benefit from, and maintain power.”
Legal challenges
In 2019, OpenAI created a for-profit subsidiary to enable it to raise much larger sums than it thought people would be willing to donate. The nonprofit currently owns about 25 percent, or more than $200 billion, of the company. He also has the right to block the most essential business decisions and dismiss the company’s management staff. Dissolving a nonprofit organization is a legal challenge.
OpenAI recently cleared a major hurdle on its path to an IPO, defeating a lawsuit brought by Musk, who accused the ChatGPT creator of straying from its non-profit mission. Musk’s claims were dismissed last month after a federal judge and jury ruled he filed the lawsuit too delayed.