Five things to know about OpenAI’s potentially record-breaking IPO plans
Five things to know about OpenAI’s potentially record-breaking IPO plans
Five things to know about OpenAI - OpenAI is on the brink of making a historic entrance into the stock market, with its initial public offering (IPO) anticipated to be one of the most highly anticipated debuts in recent memory. According to the Wall Street Journal, the company is preparing to submit its IPO documents within the next few days, signaling a pivotal moment in its journey. This move comes as OpenAI transitions from its nonprofit roots, which began in 2015, to a new structure that includes a public benefit corporation. The shift reflects the company’s growing ambitions and its desire to leverage public markets for substantial capital.
Aiming for a monumental fundraising target
OpenAI’s IPO could surpass previous records, with the potential to raise an astounding $60 billion (€55.4 billion). This would surpass the $25.6 billion (€23.6 billion) raised by Saudi Aramco in 2019, which was then the largest IPO in history. However, the competition is fierce, as SpaceX, which recently filed its own IPO prospectus, is targeting a $75 billion (€69.1 billion) raise. SpaceX is seeking a valuation range of $1.75 trillion (€1.61 trillion) to $2 trillion (€1.84 trillion), positioning itself as a direct rival to OpenAI in the race for the biggest listing ever.
Despite the daunting challenge, OpenAI’s plans have drawn significant interest from investors and analysts alike. The Wall Street Journal reported that the company has enlisted Goldman Sachs and Morgan Stanley to draft its IPO prospectus, which is expected to be submitted confidentially to regulators shortly. These financial giants are playing a crucial role in shaping the narrative around OpenAI’s valuation and market potential.
Valuation dynamics and market implications
Deutsche Bank Research analyst Adrian Cox has analyzed OpenAI’s financial projections, suggesting the company could be valued at over $1 trillion (€922 billion) at listing. This valuation would place OpenAI just behind Berkshire Hathaway, the multinational conglomerate that generated $370 billion (€341 billion) in revenue and $67 billion (€61.8 billion) in net earnings last year. However, OpenAI would surpass Eli Lilly, which reported $65 billion (€59.9 billion) in sales and $21 billion (€19.4 billion) in profit during the same period.
“It has yet to be seen how public markets will value OpenAI and its peers once they open up their financial statements to scrutiny and explain the still little-understood economics of their business models,”
noted Deutsche Bank Research. The prospect of OpenAI’s IPO is generating excitement, as it could reshape the landscape of AI investments in the public markets. For now, retail investors seeking exposure to AI have limited options, often relying on semiconductor firms, cloud providers, or large tech companies. An OpenAI listing would create a new benchmark, offering direct access to a pure-play AI entity.
OpenAI’s valuation also underscores its position in the AI sector. While Nvidia, the company with the largest market capitalization in the world, is valued at $5.4 trillion (€4.98 trillion), its recent share price surge—more than 13-fold since ChatGPT’s launch in November 2022—highlights the sector’s rapid growth. However, the AI pioneer is not alone in its pursuit of public market success. Anthropic, the maker of Claude, has been making waves with its own expansion, overtaking OpenAI in sales last month with annualised recurring revenue of $30 billion (€27.7 billion). The Information reported that Anthropic could soon surpass $40 billion (€36.9 billion) in annual recurring revenue, further intensifying the race for market dominance.
A blend of innovation and financial ambition
OpenAI’s IPO plans are a testament to its rapid evolution from a nonprofit research lab to a global AI powerhouse. The company, known for developing groundbreaking models like ChatGPT, is now eyeing a public listing that could redefine its financial trajectory. While the IPO is expected to raise $60 billion (€55.4 billion), it is important to note that OpenAI has yet to achieve profitability. Internal projections shared by The Information suggest the company is on track to report a $14 billion (€12.9 billion) loss in 2026 alone, with cumulative losses potentially reaching $44 billion (€40.6 billion) before turning a profit in 2029.
This financial outlook raises questions about how public markets will assess the viability of AI firms. OpenAI’s ability to attract massive investment despite its current unprofitability may hinge on its long-term potential and the growing demand for AI-related assets. The IPO is expected to be a landmark event, not only for OpenAI but also for the broader tech industry, which is currently experiencing a surge in innovation and capital inflows.
The global stock market context
OpenAI’s IPO would mark a significant milestone in the history of the US stock market, which is now valued at around $70 trillion (€64.6 trillion). This is roughly five times larger in nominal terms than it was during the peak of the dot-com bubble. The company’s fundraising goal of $60 billion (€55.4 billion) would also exceed the total raised in US IPOs during all but four years since 1980, according to data cited by Deutsche Bank Research. Such a figure underscores the confidence investors have in OpenAI’s future, despite its current financial challenges.
However, the path to profitability remains uncertain. OpenAI’s reliance on large-scale investments and its focus on developing cutting-edge AI technologies have led to substantial expenditures. While the company has demonstrated the ability to generate significant revenue, its projected losses for 2026 highlight the need for sustained growth and operational efficiency. Analysts are closely watching how OpenAI’s IPO unfolds, as it could set a precedent for valuing AI-driven businesses in public markets.
Competing for the crown of the largest IPO
The competition between OpenAI and SpaceX for the title of largest IPO is shaping up to be a defining moment in tech history. SpaceX’s target of a $75 billion (€69.1 billion) raise has already set a high bar, but OpenAI’s ambitions are no less formidable. The two companies are not only vying for market supremacy but also for the attention of institutional investors and the general public. The outcome of this race could have far-reaching implications for the valuation of AI companies, influencing how other startups and established firms approach their own fundraising strategies.
Deutsche Bank Research has highlighted the transformative potential of an OpenAI listing. “A scramble to make the most of investor appetite for direct exposure to pure-play AI companies in the public markets” is anticipated, according to the firm. This scenario could lead to a surge in demand for AI stocks, creating opportunities for investors while also increasing pressure on companies to deliver consistent returns. The IPO is seen as a critical step in OpenAI’s journey to secure long-term funding and expand its technological reach.
A turning point for the future of AI
As OpenAI prepares for its IPO, the tech industry is watching closely. The company’s decision to transition from a nonprofit to a public benefit corporation in October 2025 signals its commitment to balancing innovation with societal impact. This shift may also influence how OpenAI is perceived by investors, who are increasingly interested in companies that align with broader economic and environmental goals.
The potential IPO is more than just a financial event; it is a symbol of the growing importance of AI in the global economy. OpenAI’s success could inspire other startups to pursue public listings, creating a ripple effect across the tech sector. At the same time, the company’s journey serves as a case study in the challenges of scaling AI technologies while maintaining a nonprofit mission. Its IPO may not only redefine its financial strategy but also establish a new standard for valuing AI-driven enterprises in the public markets.