Sam Altman’s OpenAI seems to believe that the company is worth, in its current or near-current state, a trillion dollars. At least, that’s what the company aims to achieve when it goes public at an undetermined point in the near future. Whether you believe anything that comes out of Altman’s mouth (or those connected to him in a Human Centipede-like manner) is between you and your stockbroker.
Last week, reports did the rounds that the ChatGPT maker would head to the stock market for an Initial Public Offering (IPO), with the frankly insane target of a $1 trillion valuation. That’s not directly from Altman, but it might as well be. The OpenAI head later said, via a live stream, that “I think it’s fair to say it [an IPO] is the most likely path for us, given the capital needs that we’ll have.”
It’s a fact that the AI company needs a literal ton, perhaps several literal tons, of money. Whether it’s worth that sort of cash is another matter entirely. AI true believers aren’t likely to quibble with the familiar refrain of ‘we’re not there yet, just a little more money/time/compute, ‘ but the fact remains that artificial intelligence has done… very little that humans didn’t already have.
The technology’s utility has yet to be proven. AI does something, true, but whether people need what it does has yet to be determined. ChatGPT and others have certainly replaced web search, which Google intentionally screwed up to make more money. Even then, information on the internet is harder to find than ever — even with an apparently intelligent system trying different permutations of a search on your behalf.
Even that isn’t the point, however. OpenAI’s eventual IPO, thought to be happening as soon as mid-2026, but more likely in 2027, will make the company some money. It’ll do so in defiance of all financial sense. It might even (but this is an extremely long shot) wind up with the freshly-minted, publicly-traded, for-profit entity valued at $1 trillion or more. To do so, however, it’ll need to convince Wall Street that it will eventually turn a profit.
It’ll also have to conduct the biggest, baddest blockbuster of an IPO, the likes of which have never been seen before. Or it’ll need a horde of idiots who don’t know better, throwing their life’s savings OpenAI’s way en masse.
The last time something like that happened, there was no IPO involved. But there was plenty of speculation, artificial value inflation, and tons of folks being sold a product that turned out to be worthless. Has anyone checked what the most expensive NFT on OpenSea is lately? Spoiler: The top offer for an NFT in the past 30 days is $182,000, and it’s downhill from there. Fast. That’s a far cry from nigh on $70 million at the non-fungible bubble’s height.
Surely AI is different? Well… perhaps. Perhaps OpenAI and its various competitors come up with something that does more than search the web, read stuff so you don’t have to, and write grammatically correct (mostly) but somehow soulless prose. You know, something that will actually change how the world works? Or perhaps Amazon, Microsoft, Google, OpenAI, Perplexity, and the rest are simply dancing rings around Nvidia, handing each other money, and calling ever more complicated chatbots progress.
Yes, investors will throw money at OpenAI if and when it goes public. But most of those investors won’t be paying attention. OpenAI has never made money. There’s no sign that it will ever make money. Certainly not enough to justify the amount the company has already spent. But the sunk cost and the fear that someone else will figure out how to make AI work first mean the biggest brands in tech can’t stop investing now. If they do, someone else might get there first.
But that’s not how the stock markets work. OpenAI might well make a trillion dollars, right off the bat. It loses several billion dollars every quarter. Its most recent loss may be as high as $11.5 billion. It might — might — reach $20 billion in annualised revenue at the end of this year. But the numbers won’t matter. Folks will invest regardless. It’s a function of belief. After all, there’s a chance, right? There’s no way every large software company is wrong. Right? After all, don’t they release better and better products all the time?
Actually… about that…
