OpenAI, the creator of ChatGPT, has anonymously filed paperwork to list in the U.S., dramatically changing the landscape of the Wall Street and Silicon Valley dialogue. The company disclosed the filing on Monday, joining rivals such as Anthropic, as both artificial intelligence giants rush to go public. With investors eagerly anticipating a piece of the AI pie, they now await to see which of these giants will be the first to go public and how the market will take the new additions.
OpenAI has not announced the amount of the offering, nor has it revealed the conditions. It could take some time, the company said in a carefully-worded statement, because they have some things they want to do that are probably easier as a private company.” Such measured language is uncommon in IPO announcements, and suggests that there is a greater strategic patience. As a content strategist, this translates to OpenAI valuing flexibility of operation over short-term profitability. Plus, with AI technology advancing so quickly, it could be maturity without hesitation.
Reuters reported earlier that OpenAI is aiming for a $1 trillion valuation in a stock market listing that could be as soon as September, behind the scenes. That would make OpenAI an extremely distinguished club that includes only a handful of other companies. Few companies have ever reached a $1 trillion market value and fewer have done so immediately after going public with an IPO. However, it is not only a matter of one company. This valuation would pave the way for three trillion dollar valuation companies to go public in quick succession, according to the original reporting from Manya Saini and Pritam Biswas. The trio are regarded as the most important examination of investor appetite for growth tech stocks in the past decade.
The competitive undertones of OpenAI vs. Anthropic are interesting in this moment. Both companies have developed from the same origin and philosophies, but have followed distinctly different paths to the marketplace. Anthropic has always touted itself as being the more safety-conscious company when compared to OpenAI, with a focus on constitutional AI and guardrails for ethical boundaries. At this moment both are in a race to go public, so investors will have a chance to compare them not only based on technology, but also on governance, quality of revenue and long-term risk. The transparency is very high for two companies working in the esoteric field of cutting-edge artificial intelligence, and will undoubtedly make both of them far more diligent in their roadmap communication.
Personally, those who have tracked the AI space over the past 2 years know how it feels to see a change in the industry. As for 2023 and 2024, it was all about models and fundraising. Now the talk is IPO, valuation and readiness for regulation. Building a smarter chatbot is not enough these days. It has fallen to companies to show they can be sustainable public institutions, that they can have audits, real revenue reporting and accountability to shareholders. It’s a transition that’s never easy, and OpenAI’s own announcement that some things are “easier as a private company” is a clear confession of those tensions.
A second layer to consider is the law. Elon Musk recently lost a lawsuit seeking to contest part of OpenAI’s structure and direction. This decision effectively lifted one of the legal hurdles that could have hindered or complicated an IPO. The lawsuit had left a tarnished reputation on the governance story of OpenAI, regardless of whether the company’s concerns were justified or not. Now the cloud has lifted, the company will be able to show itself to public market regulators without the distraction. This is not to say that there are no legal risks involved (there are plenty), but it will certainly eliminate the biggest hurdle from an IPO roadmap until now.
However, for the typical investor who isn’t into following the SEC filings, the more pressing issue is probably a more practical one: Should regular folks care about an AI startup going public? The answer is yes – and in a way that is not reflected in most headlines. If a company, such as OpenAI and Anthropic, goes public, then they are subject to a much larger group of people that can scrutinize them. These models will need to be trained better, with a clearer picture on how user data is being handled and how much energy will be consumed by their data centers; financial analysts, journalists and even shareholders will ask questions accordingly. That the public pressure can result in better standards throughout the industry. But it may also cause hasty decisions and thinking in quarters, which is what OpenAI’s “easier as a private company” comment cautions against.
Similarly, it’s important to keep in mind what a $1 trillion valuation would entail in reality. At this stage, OpenAI would be bigger than the majority of major banks, car companies, and even some whole national stock exchanges. That multiple would require the company to earn tens of billions of dollars in annual sales. As of now, OpenAI’s revenue is generated through ChatGPT subscriptions, API usage, and enterprise licensing agreements. All those are increasing, but increasing in order to become a trillion dollar valuation takes close to perfection with year after year. There are many examples of tech start-ups that flew too high, too soon, after going public, as the valuation was simply too high.
Anthropic is also getting ready to go public, on the other side of the competitive fence. With the two largest generative AI firms coming out so close together, it will be a natural experiment. Investors will look at their prospectuses, risk factors and the amount of time they were locked up from the inside. Anthropic’s more conservative, research-based culture may resonate with institutional investors who are more conservative with governance, some analysts believe. But some say that OpenAI’s first-mover and huge user base make it a better choice. There is no clear right or wrong. That is a real state of uncertainty that doesn’t happen in tech IPOs, which tend to be more fabricated and hyped.
