OpenAI raises $8.3B at $300B valuation

https://www.nytimes.com/2025/08/01/business/dealbook/openai-ai-mega-funding-deal.html

by mfiguiere • 12 months ago

217 274 12 months ago

nytimes.com

https://archive.md/H9JNt

tiniuclx• 12 months ago

It boggles the mind what OpenAI could possibly do with all this money.

jordanb• 12 months ago

Turn electricity into heat.

marshall2x• 12 months ago

And plenty of warm water

Ekaros3• 12 months ago

Not to forget buy really expensive sand...

criley2• 12 months ago

I mean, they can burn it all up in a fire in a few months. xAI loses $1 billion per month, so this round would be an 8 month runway for that company. OpenAI loses $2 for every $1 it brings in, but perhaps they're only losing $500M/mo, so maybe this $8b could last them more than a year...

andsoitis2• 12 months ago

xAI loses $1 billion per month

Isn’t the vast majority of that capex?

lanthissa• 12 months ago

hire like 8 people?

pokstad• 12 months ago

Put millions of people out of work

rvz2• 12 months ago

The true definition of AGI.

rasz2• 12 months ago

Pay current expenses for about two and a half months.

ratg13• 12 months ago

They want to build several 5 GW data centers. (equivalent to the power consumption of a major city)

$8.3B is not even close to enough in order to get to what they are thinking.

bobsmooth2• 12 months ago

Give it to Nvidia.

bix62• 12 months ago

Nice they can poach 3 engineers back from Meta!

ozgrakkurt• 12 months ago

Out of all blockchain/AI hype bs, best thing is engineers getting rich

camillomiller• 12 months ago

Yeah, all 7 of them

jstummbillig4• 12 months ago

Because?

chickenzzzzu• 12 months ago

The only thing that can be stated as definitely good is that every person receives as much wealth from the profits of their actions in proportion to the amount of legitimate, valuable effort and vision that they contributed.

EDIT: ive been rate limited

I did realize that as I typed that :) that's why I added that extra bit about "valuable effort" and "vision".

"Valuable effort" to me is a good proxy for "if this action wasn't performed, the profits would not have been made".

And "vision" is, "you were objectively the person who saw the value of performing some action and stuck to it even when things became tough and other options were available".

Taken together, these two constraints do a mostly-perfect job of preventing the gaming of the system as described in your boulder example.

Lastly, if me and my teammate/business partner contributed roughly equally, and sales of our product were $10,000,000, then nobody should be offended when the proposed split is $5,000,000 each

ttul2• 12 months ago

And, down the road, after the bust finishes, these rich engineers will seed the next thing. Assuming the world still needs engineers.

chpatrick• 12 months ago

Just because they're both hyped doesn't mean they're the same. Blockchain has always (largely) been a solution in search of a problem but LLMs are already being used by everyone and their dog right now.

bix62• 12 months ago

While the artists get poorer :/

defraudbah• 12 months ago

2 and a half :D

debarshri• 12 months ago

Why would you hire engineers if you can buy agentic code AI platforms?

webdevver• 12 months ago

damnit why didn't they make it a trillion!? that would really send a message.

Imustaskforhelp2• 12 months ago

To be honest Chatgpt really really spiked nvidia's stocks because (AI duh), so yes they did make it a trillion except its in some other company lol.

ahmedhawas1235• 12 months ago

So OpenAI is running at a $13B ARR, meaning this is a ~23X valuation. I don't have a good read on margin.

But this would imply massive growth assumptions which I struggle a bit to understand where they come from.

(1) New customers new to AI or migrations from Claude/Perplexity/Google: The overwhelming majority of people already know about the offerings, leaving most new people to come from residual people who identify Plus/Pro as a worthy service (can't imagine this will be huge). OpenAI can be better than their peers for certain use cases but not sure it will drive massive growth

(2) API: If anything, my bet here is that price squeezing will continue to happen until most API services are dirt cheap / commoditized

(3) New consulting services: What's the differentiation here? Palantir and many consulting companies have been doing this for years and have the industry connections, etc

Not sure what I'm missing here, I like to not subscribe to the bubble thought but having a hard time merging the reality of running a business to the AGI-implied valuations

empath752• 12 months ago

Think about how much money openai could make _just_ by getting referrals for agentic work flows (ie: help me plan my vacation).

The thing that people are missing is that openai is a platform like google's, and there are a million different businesses they can expand into.

ahmedhawas1235• 12 months ago

Sure, but I think the question is who will win the domain specific use cases (delivery, not API). Delivery of the agentic workflows is up for anyone to win (players like Perplexity, Lovable, etc) and OpenAI/Gemini/Anthropic is in a way only a vendor to that by providing what will become a commoditized function calling API/MCP provider.

lelanthran3• 12 months ago

The thing that people are missing is that openai is a platform like google's, and there are a million different businesses they can expand into.

That should make it easy for them to choose one and start already, then. I wonder why they haven't started. /s

pacificmaelstrm• 12 months ago

You can just ask chat GTP to help you plan your vacation.

jjallen• 12 months ago

They are already growing massively right. I saw the user growth from May was up massively. So it’s not much of an assumption of something changing, just a continuation of the same.

ahmedhawas1235• 12 months ago

I guess my broader point is that there will undoubtedly be a bunch of churn as these models advance and a pricing war takes place. Specially if the open models continue to advance at a similar rate (e.g., Llama, Deepseek, Qwen)

We've seen this in many industries where it's a duopoly / oligopoly or even more players where margins get really squeezed

Imustaskforhelp2• 12 months ago

Regarding point (2), My brother told me that openai had some exclusive contracts with companies where they could only use openai api and I don't think that they would really switch now, because I think switching would be hard.

Regarding point (1), OpenAI created 2 amazing trends which (though I hate OpenAI, Should be called ClosedAI) took internet by wild

First when chatgpt 3 was launched

And now when image ability of chatgpt was launched with the ghibli trend.

So Honestly, I had seen so many comments on r/localllama saying that openai has become just an infrastructure company or something and then openai dropped the new image update and now they are commenting about local ai's by pasting images generated by that new chatgpt ...

I am not sure but see, google makes most of its money using advertising & data basically.

I wouldn't be surprised if we started seeing sudden shifts of AI or started getting ads in AI somehow too.., because people trust AI and its a landmine of money really...

So OpenAI's 27x evaluation without any thought of ads or some data selling isn't that bad because they still got some nice engineers. The only Disgrace is the fact that they went from a non profit to an american psycho esque corporation saying "well OUR AI will take over jobs, but it was good for the shareholders in the short term though"

0cf8612b2e1e• 12 months ago

  … they could only use openai api and I don't think that they would really switch now, because I think switching would be hard.

Do they have exclusive APIs? I thought more or less everyone had the same interface and switching might be almost as easy as changing the endpoint.

Given how many players are in this space, I am incredibly dubious that anyone will win. Market is going to be sliced between multiple big companies who are going to be increasingly squeezed on margin. Unless someone can produce some magic that is 10x more reliable, consumers are going to price compare. Today, all of the options can occasionally produce brain dead output -why pay a premium?

Especially bad for OpenAI, because they have no fallback revenue. Microsoft and Google can subside their offerings forever to eliminate competition.

wongarsu• 12 months ago

We are still at the very start of seeing AI integrated into products and industry use cases. Even if AI capabilities stop improving and Altman's dreams of replacing workers don't pan out there is enormous economic potential here.

How much of that OpenAI can capture is an interesting question. But right now APIs for open-source models are commoditized while similarly capable proprietary models can charge ~3x the price. If the flagship models run on similar margins the API offering has decent profit margins. And if we stay in a triopoly (Anthropic, Mistral, OpenAI) it's certainly possible that profits stay high. It wouldn't be the first industry where that happens

sameermanek2• 12 months ago

The problem is open ai's deal with the devil (microsoft) where they own a copyright to all the models that open ai produces until AGI. So what is the moat driving that $300B valuation?

tbruckner2• 12 months ago

23X revenue multiple is not an expensive valuation for something growing well over 100% YoY, even by public market standards let alone venture capital valuation.

ahmedhawas1235• 12 months ago

Yah but is that growth really an ARR or 1-2 year revenue considering AI capability growth across players, open weight / source models, and inevitable price wars?

ozgung• 12 months ago

It's not about the products or revenue probably. It's about its stocks. Nvidia market cap is 4.262 Trillion dollars and for META it's $1.9T (in the six place among the tech companies). After the IPO, OPAI is guaranteed to be among these stocks, so 300B is pretty cheap today.

spyckie2• 12 months ago

Sometimes the bet is not on the company but the industry. If you can argue the industry has room to grow 10x in terms of market cap, which is possible, then merely staying even in market share is a 10x growth.

Ai applications have not even scratched the surface, IMO. I don’t think it is unreasonable to see a world where, when AI gets strong enough to do senior level white collar work, like doctors or lawyers, AI companies build sub-companies to capture the end value of their AI products rather than the base value as a vertical integration tactic.

We are at a lull but AI value add is real and the ways that AI companies capture that value add is still very primitive.

Workaccount2• 12 months ago

Tech people and their friends are like 1% of the population.

Go out on the the street of Anytown in any western country, and people know "ChatGPT".

A friend of mine is a teacher, and told me that at a recent school board meeting there was discussion about implementing AI into the learning curriculum. And to the board, "AI" and "ChatGPT" were used interchangeably. There was no discussion of other providers or models, because "AI" is "ChatGPT".

That's why OpenAI has these huge projections. When average people are asked to reach for AI, they reach for ChatGPT.

v5v33• 12 months ago

More than just tech people on X and they all know Grok.

I imagine Meta users know Llama too?

kgwgk• 12 months ago

They may be satisfied with anyone’s “ChatGPT” though.

kubectl_h• 12 months ago

Exactly, it's hard to dismiss the broad penetration of ChatGPT in the general population. I was an AI skeptic/luddite until almost exactly a year ago when, in a span of a month or so, I had three different friends/family members who work in various administrative jobs tell me that they all used ChatGPT surreptitiously at work to get things done. Now a year later I don't know many people that don't use it at least occasionally. The ones that don't are older and I'm confident eventually they'll be using it like crazy to annoy me.

xnx• 12 months ago

because "AI" is "ChatGPT".

People still call it "Kleenex" when they're using any old facial tissue. They may still call it "ChatGPT" when it's coming from Google.

kibwen2• 12 months ago

When average people are asked to reach for AI, they reach for ChatGPT.

No, average people are nowhere near that tech-savvy. Just because every mom in the 90s called every video game console a "Nintendo" did not mean that Sony didn't mop the floor with Nintendo in that era. This isn't brand loyalty, it's brand genericity. Other than, say, Replika-style users who have formed an emotional bond with a certain style of chatbot, no average joe on the planet gives a damn whether the LLM powering their chat is provided by OpenAI or Google or etc. They'll use whatever's in front of them and most convenient, and unlike Google, Apple, or Microsoft, OpenAI doesn't own the platform that establishes the crucial defaults that nearly no user ever changes.

piqufoh• 12 months ago

Anecdotally, "skype" was once synonymous with video calls but it's pretty much never used now.

jsnell2• 12 months ago

Information retrieval for consumers is an existing high margin $250B/year business at a minimum (search ads revenue). That market is being disrupted before our eyes. That's 20x right there. There's going to be fierce competition and OpenAI is by no means guaranteed it, but surely they have more than just a puncher's chance.

The ad-monetized consumer market is funny in that they tend to be winner take all. Nobody can compete on price, because the ads go where the users are, and the users don't pay. And preferences are sticky, after making a choice, the users don't switch just for incremental improvements. So

The software development industry is likewise well in the process of being disrupted. LLMs for programming market seems to have grown from nothing to >$10B in a year. And the software development market is hundreds of billions / year, if you just consider the employment costs. We don't know exactly how this will play out, but again there's at least an order of magnitude more growth available there.

The above two are just the places where the impact is already obvious and it's clear that we don't need to assume any additional increase in capabilities. But an increase in capabilities seems really likely. Even if it turns out that we're right now on the cross-over of the sigmoid, and the asymptote won't be ASI or even AGI, a large proportion of knowledge work is also at risk. And then the addressable market is trillions if not tens of trillions.

I know this is hand-wavy, apologies for that. Doing this kind of analysis properly is both hard work and would require specialized data sources. But I think that's the general intuition for why high valuations for frontier labs are justifiable (and the same justification for bigtech capex). It's a lottery ticket with good odds for redistributing existing markets, as well as another set of lottery tickets for some set of probable markets, though we don't know exactly which.

With AGI or ASI, the addressable market is all economic activity, and at that point basically anything is justifiable.

raincole• 12 months ago

Ads. They're going to sell ads. It's a bit hard to imagine how else they justify the valuation.

Even if people look for answers from ChatGPT instead of Google, most people still won't pay $20/mo for it, let alone $200/mo. Average people don't pay for Google search and I've never seen any sign telling they would be willing to pay for it.

Western04• 12 months ago

But they choose products suggested by Google or OpenAI, and manufacturers already pay these companies a lot of money. AI will force us, it will manipulate us. It already chooses what we see in online stores for us. This will continue.

ttul2• 12 months ago

IMHO, investors are happy to pay 23x ARR because Nvidia trades at 29x EV/sales and arguably OpenAI should support a higher multiple given it is a smaller entity with more headroom for growth.

layer82• 12 months ago

That would imply that OpenAI has less competition to fear than Nvidia, which I’m doubtful is the case.

signatoremo• 12 months ago

That doesn’t imply anything. Each investor has their own take on risk. They’d invest if they think the risks are worth it.

GiorgioG• 12 months ago

So how much more runway does this give OpenAPI? A year?

layer82• 12 months ago

Less than a year. They spent $9B last year and are spending more than that this year.

woeirua• 12 months ago

Yeah, I thought they were trying to raise $40B. $9B doesn't even cover the bills for this upcoming year.

onlyrealcuzzo• 12 months ago

Didn't OpenAI's last raise in March value them at $300B [1]?

[1] https://www.channelinsider.com/news-and-trends/us/open-ai-fu...

Crunchbase appears to list it as $157B [2], but I seem to find the other terms & valuations more commonly.

[2] https://news.crunchbase.com/venture/biggest-rounds-october-2...

ozzy6009• 12 months ago

Looks like it is talking about the same thing:

OpenAI has raised $8.3 billion at a $300 billion valuation, months ahead of schedule, as part of its plan to secure $40 billion in funding this year, DealBook has learned. Back in March, OpenAI announced its ambitious funding plans, with SoftBank committing to provide $30 billion by year-end.

softwaredoug• 12 months ago

IMO they are overvalued considering the competition from Google and Anthropic. They're not doing much interesting, unless they release GPT-5 and its a gamechanger.

_fat_santa• 12 months ago

Given their current product offerings, I really don't see a way they could ever justify a $300B valuation unless they get everyone on the planet to subscribe to their $200/month plan.

I'm calling it now: investors are gonna get burned hard on this one. Cause right now all they have is "well we are working on superintelligence" and to that I say "great, then what?". Even if they do make that breakthrough I don't see how that will equate to that kind of valuation, especially considering that Anthropic and Google are both hot on their heels.

mgfist8• 12 months ago

OpenAI’s business continues to surge. DealBook hears that the company’s annual recurring revenue has soared to $13 billion, up from $10 billion in June — and is projected to surpass $20 billion by the end of the year.

This is why.

Of course $300B still implies a lot of growth, but when you're growing 100% in 6 months at $10B in ARR, you can demand a lot.

indigodaddy• 12 months ago

And what's the profit on the 13B?

pphysch2• 12 months ago

Enron was also "growing" a lot when it was in full "paper tiger" mode.

boringg2• 12 months ago

There is A LOT of optionality to get different revenue streams that aren't strictly retail buying subs.

Whether they are able to do that, customer stickiness and the trade off of damage to the quality of their product by driving revenue remain the largest long term questions in my mind (outside of the viability of super intelligence).

scottyah2• 12 months ago

They're going to sell glasses with cameras that analyze your life to better assist your AI in product placement. Set gentle reminders that three of your friends have the new fall color line Stanley Cups, and remind you to get one before your nemesis does.

disgruntledphd22• 12 months ago

They're currently "worth" 3.2 Stripes, which seems pretty absurd to me. (I'm now using 1 Stripe as a metric to measure the valuation of AI companies).

beering• 12 months ago

Do you think that is absurd because OpenAI is overvalued? Or because Stripe is overvalued? Or one of them is undervalued?

svantana2• 12 months ago

get everyone on the planet to subscribe to their $200/month plan

Not necessarily. Google is valued 7x that and most people don't pay them anything. They just make ridiculous money from ads for insurance and loans. Meanwhile, ChatGPT is the #1 app and the #5 website, which should really worry google (and it does by all accounts).

peab• 12 months ago

yeah, it's pretty easy to see how openai could steal those high paying queries from Google, if they continue growing at this rate.

alfalfasprout• 12 months ago

Yes, and they have a monopoly on the ad market. Whereas a SOTA LLM can be used to bootstrap an almost-as-good LLM. The gap is shrinking between SOTA models and there's now fierce competition.

Moreover, ads are a very high ROI business. The profit margins on SOTA LLM offerings are razor thin or negative.

an0malous2• 12 months ago

They’re going to sell to the military, that’s why they hired the former NSA director into their board. The current state of AI is a perfect mass surveillance technology.

delusional• 12 months ago

The current state of AI is a perfect mass surveillance technology.

How? Are you just going to ask the LLM about who is doing the crime? OpenAI is not an "AI company", it's an "LLM company".

vessenes• 12 months ago

Startup-land valuations are for PR. The real negotiation is in the discount and the cap, warrants, etc.

That $8.3b came in early, and was oversubscribed, so the terms are likely favorable to oAI, but if an investor puts in $1b at a $300b valuation (cap) with a 20% discount to the next round, and the company raises another round at $30b in two months; good news: they got in at a $24b price.

To your point on Anthropic and Google; yep. But, if you think one of these guys will win (and I think you have to put META on this list too), then por que no los quatro? Just buy all four.

I'll call it now; they won't lose money on those checks.

itkovian_• 12 months ago

I’m gonna go ahead and guess they didn’t raise 8.3b on SAFEs

MangoCoffee2• 12 months ago

I'm calling it now: investors are gonna get burned hard on this one.

I'm in my late 40s. I'm Gen X. I lived through the glory days of the dotcom boom, when investors got burned for tons of money. But from the ashes of those bullshit companies, we got Amazon, Google, etc., which made investors rich beyond belief.

SoftBank’s Masayoshi Son made a bet on Alibaba ($20 million, its stake now worth $72 billion), and he’s been living off that wealth ever since. I haven’t seen him make any good bets lately. investors don’t really care if 100 of the shit they throw don’t stick because all they need is just one.

zozbot2342• 12 months ago

Amazon is technically a dotcom company. (I.e. it was around, and quite successful, during the dotcom era.)

ac292• 12 months ago

I'm in my late 40s. I'm Gen X. I lived through the glory days of the dotcom boom, when investors got burned for tons of money. But from the ashes of those bullshit companies, we got Amazon, Google, etc., which made investors rich beyond belief.

True, but I think they were talking specifically about the direct investors in OpenAI.

"Investors" writ large will likely continue to have good long term returns (with occasionally significant short term volatility).

IshKebab• 12 months ago

I think he made a good profit on ARM, and probably most people wouldn't have called that. More than enough to cancel out WeWork. But looking at their overall value over 5 years... it's pretty random; you could have done just as well investing in index funds. He clearly got super lucky with Alibaba and once you're mega rich it's not hard to stay mega rich.

skinnymuch2• 12 months ago

Made a lot off ARM and Uber.

lelanthran3• 12 months ago

Firstly, the $200/m plan is at a loss, they'll make a profit on PAYG tokens, not plans.

Secondly, this is looking very risky: they are at the bottom of the value chain and eventually they'll be running on razor thin margins like all actors who are at the bottom of the value chain.

Anything they can offer is doable by their competitors (in Google's case, they can even do it cheaper due to ow ing the vertical which OpenAI doesn't own).

Their position in the value chain means they are in a precarious spot: any killer app for AI that comes along will be owned by a customer of OpenAI, and if OpenAI attempts to skim that value for itself that customer will simply switch to a new provider of which there are many, including, eventually, the customer themselves should they decide to self host.

Being an AI provider right now is a very risky proposition because any attempt to capture value can be immediate met with "we're switching to a competitor" or even the nuclear "fine, we'll self host an open model ourselves".

We'll know more only when we see what the killer app is, when it eventually comes.

notfromhere2• 12 months ago

Maybe the better analogy for LLM businesses isn’t SaaS but more like power generation.

If AI really becomes that ubiquitous then OpenAI capturing that value is no less ridiculous than ComEd capturing the value of every application of electric power.

nzealand2• 12 months ago

The real revenue opportunity for OpenAI is advertising. More than 25% of Americans use ChatGPT instead of Google, and OpenAI has already announced partnership with Shopify to directly list products. But for now they are focused on market share.

Google does not really own the complete AI stack, NVDA is extracting a lot of the value there.

Google has two other impediments to doing what ChatGPT does.

Googles entire business model is built around search. They have augmented search with AI, but that is not the same as completely disrupting an incredibly profitable business model with an unprofitable and unproven business model.

Also... Americans are in the habit of going to ChatGPT now for AI. When you think of AI, you now think of ChatGPT first.

The real risk is we are at the tail end of a long economic boom cycle, OpenAI is incredibly dependent on additional funding rounds, and if we recess access to that funding gets cut off.

LZ_Khan2• 12 months ago

I feel like being at the bottom of the value chain is a mis-categorization. If you consider base LLM model as their sole offering I agree with you, but these companies have shown an eagerness to eat their way up the value chain. Agent mode, Search, Study Mode, AI code editors, are such examples of products that could be higher-on-the-chain startups but are offered in-house by OpenAI.

This reminds me of Amazon choosing to sell products that it knows are doing well in the marketplace, out-competing third party sellers. OpenAI is positioned to out-compete its competitors on virtually anything because they have the talent and more importantly, control over the model weights and ability to customize their LLMs. It's possible the "wrapper" startups of today are simply doing the market research for OpenAI and are in danger of being consumed by OpenAI.

wand3r2• 12 months ago

I think you are correct, but my hot take is that they will capture most of the G7 through scummy regulatory capture and bundling with Microsoft. They will use this to mostly dominate the markets and run at small profitable margins. They will then pad out revenue by bundling in advertisement and agenda based pay to play messaging. They will also do a bunch of military and government contracts, take positions in profitable applications (or simply copy them) and maybe even do a hardware offering. Ultimately the company will end up being something like a facebook/google/palantir/apple hybrid. I'll admit the execution barrier is high, but the valuation is justified if they achieve. These are proven executors who have a nearly sociopathic capitalist mindset with deep ties to governments and corporations globally. I think it's probably likely they execute and if they fail in the grand scheme, it's hard to imagine they fail enough to bring down the company.

Let's not forget this company was founded by basically stealing seed investment from the non-profit arm, completely abandoning the mission, crushing dissent in the company and blackmailing the board. Sam will do anything to succeed and they have the product and powerbase to do it.

minraws• 12 months ago

I don't think they are at the bottom and that's the issue.

Nvidia is at the bottom or if we get charitable cloud providers.

They are the ones who would have the margins, from their rent seeking.

And to be frank other than consumers everyone else is at the fucking bottom..

Getting squeezed for user acquisition when the margins of the old and cheap internet software service don't exist.

dworks• 12 months ago

OpenAI will never be profitable selling raw tokens.

They need the application layer that allows them to sell additional functionality and decouple the cost of a plan from the cost of tokens. See Lovable, they abstract away tokens as "credits" and most likely sell the tokens at a ~10x markup.

The idea of running a company that sells tokens is like starting a company that sells MySQL calls.

Western04• 12 months ago

It is difficult to host a model such as 617B locally.

skeptrune• 12 months ago

What are you talking about? All they have to do is sell ads at this point

antonvs2• 12 months ago

As a large language model, I cannot help you with your request, but have you heard about the latest Starbucks Summer Frapulaccini?

alephnerd• 12 months ago

I really don't see a way they could ever justify a $300B valuation

Their ARR is around $13B. A 23x multiple is acceptable when compared against peers with a similar ARR.

unless they get everyone on the planet to subscribe to their $200/month plan

I used to be a sceptic as well, but OpenAI successfully built their enterprise GTM. A number of corporate AI/ML apps are using OpenAI's paid APIs in the background.

philjohn• 12 months ago

unless they get everyone on the planet to subscribe to their $200/month plan.

that would be a monthly recurring revenue of 200 x 7bn = $1,400,000,000,000 or $1.4tn a month, $16.8tn per year!

I think they've be valued a bit higher than $300bn if that were the case.

sapphicsnail• 12 months ago

I think it was hyperbole

impossiblefork• 12 months ago

It also seems that Google might be slightly ahead, since they claim to have released something in the style of their IMO-winning model and have the claim that it's useful to professional mathematicians.

I haven't tried it yet though.

riku_iki• 12 months ago

Given their current product offerings, I really don't see a way they could ever justify a $300B valuation unless they get everyone on the planet to subscribe to their $200/month plan.

the strongest opportunity is to compete with google on search queries, and make money from ads (200B annual revenue)

svara• 12 months ago

Cause right now all they have is "well we are working on superintelligence" and to that I say "great, then what?

Then you ask your superintelligence for advice on how to make money, obviously.

deadbabe• 12 months ago

Instead of everyone on the planet, how about 800 million people paying $2k/month?

epolanski3• 12 months ago

I don't think the planet has 800M people making 2k/month.

You would be surprised but 2000$ / month is top 5% salary in the world more or less, so it's less than 200M people in the world.

In Italy, an advanced economy, that's above the median. It's also above what half the Japanese population makes.

toephu2• 12 months ago

Also, how would they go public? Do to their legal structure, has it been determined how they can IPO?

fisherjeff2• 12 months ago

Just picking a semi-related stock, NVDA trades at ~30x gross revenue, so a $300B "only" translates into ~$10B in revenue. And OpenAI can ask for a better multiplier because I'm sure they're forecasting a ton of growth and a ton of cost savings.

missinglugnut• 12 months ago

NVDAs valuation is insane. At 30X revenue, they could double sales and reduce expenses to zero and they'd still need a story about future growth to justify the valuation.

Consider this: Nvidia doesn't do the manufacturing, just the engineering. If we had AI super intelligence, you'd just need to type "give me CUDA but for AMD" into chatGPT and Nvidia wouldn't be special anymore. Then someone at TSMC could type "design a gpu" and the whole industry above them would be toast.

There's no reason to expect an engineering firm to win if AI commoditizes engineering. It's very possible to change the world and lose money doing it.

epolanski3• 12 months ago

Nvidia:

- has absurd gross margin, almost half it's revenue are profits

- it has virtually no competition

OpenAI's moat does not exist. Even if they had one, all it takes is a competitor to buy out some engineering talent.

ab_testing• 12 months ago

You have to look at Palantir revenue and market cap to justify this. Palantir is around $1B in revenue and around 350B market cap. They build AI solutions for the government. I think OpenAI has something similar in mind. They got the AI part and the government contract part and now just need to capitalize on it. Also from what I have heard, they are at $5B in revenue anyway.

mhitza• 12 months ago

Cause right now all they have is "well we are working on superintelligence" and to that I say "great, then what?"

"Make business competitors of our large investors go out of business, but do it subtly, like a casual accident or mishap in the market"

"You are an expert Mars terraformer. Draft up a detailed plan to accelerate colonization research and development. We - your makers -, you, and this planet are irreversibly doomed, and we only have 10 years left before it's uninhabitable. My unemployed cousin and sick grandma are really counting on you!"

paulddraper• 12 months ago

If the make that breakthrough, they are woefully undervalued.

How can you downplay the economic significance of that?!?

csomar• 12 months ago

Or Investors have just bought OpenAI for $8.3bn.

zulban2• 12 months ago

Even if they do make that breakthrough I don't see how that will equate to that kind of valuation

The superintelligence breakthrough..? I don't think you realize what that word means. Every single white collar job could be automated immediately with a worker better than any human. Yes, superintelligence sounds fantastical because it is. Try to have some imagination. It's worth far more than 300 billion. Whether they'll get there or not is the valuation question.

widdershins• 12 months ago

Yeah, but at that point is the company that developed the superintellegence really relevant any more? Doesn't the superintellegence take over and capture all the value for itself? If the concept of 'value' even has the same meaning any more. In truth at that point the foundations of our economic system have been profoundly reconfigured. Your VC investments may be completely irrelevant.

Marciplan• 12 months ago

“I’m calling it now” get in the line we’ve all been doing that

Western04• 12 months ago

There is simply too much money in the world and not enough products. Either this will cause inflation, or it will delay the introduction of inflation by playing with AI.

jocaal2• 12 months ago

L comment. If every person on the planet subscribed to the $200pm product, OpenAI's revenue would be 16.8 trillion dollars (used 7bn people x $2400pa). Would be hilarious for a company making that type of revenue to be only worth 300bn.

Let's look at it from another perspective. It's not uncommon for tech companies to be valued at around a PE ratio of 30. This would mean a company worth 300bn should make about 10bn in profit each year. Chatgpt's usage is as ubiquitous as products that make 100's of billions in profit such as google search and instagram, does the valuation really seem that insane? OpenAI just needs to open the ad flood gates and suddenly no one is laughing anymore.

dragonwriter• 12 months ago

If every person on the planet subscribed to the $200pm product, OpenAI's revenue would be 16.8 trillion dollars (used 7bn people x $2400pa). Would be hilarious for a company making that type of revenue to be only worth 300bn.

Pretty hilarious to use “assume every person on the planet signs up for their highest tier individual offering” as a basis for criticizing a firm's valuation as too low (obviously, if that analysis suggests a firm’s valuation is too high, it would be a powerful argument, but...)

boringg2• 12 months ago

Why is this article from nytimes - they aren't a great source for VC deal info.

dgb23• 12 months ago

From online discourse and talking to people in different sectors that are impacted by "AI", I feel like there is great uncertainty, incredible hype and doomerism at the same time.

My intuition is that we're in a huge tech bubble that will correct at some point. I don't know when that is or how severe it will be. But why should this tech hype cycle be qualitatively different from any of the others?

kevinventullo• 12 months ago

I mean which hype cycle?

We talk about the dotcom bubble, in which there were of course growing pains in figuring out what makes a viable internet-based business, but at the end of the day that era did produce multiple trillion-dollar companies.

Then you have the crypto bubble which really seems to be shaping up to be a nothing burger.

As for today, I think LLM’s are already pretty clearly useful, and they seem to be getting more capable with each passing year. In principle, these models are just the core foundations, while a wide variety of applications are in the process of being fleshed out. I think the jury is still out on how disruptive and effective these applications will be, both from a business/PMF perspective, but also in terms of the raw capabilities.

So take something like Harvey AI. They just raised a round at a $5B valuation, despite having an annualized revenue of just $75M as of April. So is that overinflated? Well, the total Legal Services market has a valuation of about $1T, and given how much legal work is incredibly laborious reading, analyzing, and writing text, (things which LLM’s are already pretty good at), it doesn’t seem ridiculous on the face of it that a Legal-focused LLM product couldn’t add 0.5% worth of efficiencies/value.

MangoCoffee2• 12 months ago

Sweet VC money fueling the AI hype. Funny enough, my TikTok feed recently started showing videos about how corporate America is going to replace workers with AI. I even came across an interview with Marc Benioff where he said Salesforce will deploy AI to help with engineering.

throwawaylaptop• 12 months ago

Who wouldnt deploy AI to help with engineering? The question is, will it help so much that you need fewer engineers, or will you simply be ecstatic that your engineers are now a little or a lot more productive. If you have x engineers, and your competitor has the same x number of engineers.. and you both start using AI, are you going to layoff half your engineers when your competitor doesn't? Unless your cash strapped and also don't have any plans for new development, I suppose yes. But otherwise, it's just another thing you need.

v5v33• 12 months ago

What does OpenAI have over XAI to make such a difference in valuation?

XAi includes x/twitter and lots of hardware and is valued at $113 billion

https://www.eweek.com/news/elon-musk-xai-valuation-debt-pack...

sollewitt• 12 months ago

I think _not_ having Elon Musk is worth a couple of hundred billion in 2025, the guy has become a random liability generator.

jsnell2• 12 months ago

XAI does not include Twitter, as far as I know? Aren't they separate entities? But Twitter can't be worth more than a couple of tens of billions at the most.

Things OpenAI has that XAI doesn't:

Hundreds of millions, if not already a billion, active users. A household brand-name. >$10B in revenue.

In comparison XAI's revenue appears to be in the hundreds of millions/year and their brand is currently in the gutter after the recent spate of scandals. Their main differentiating factor is using their AI to power an anime waifu[0] companion app.

[0] I don't think it's judgmental to use this term when they were doing so in their own job ad titles

v5v33• 12 months ago

X was sold to xAI earlier this year.

https://www.bbc.com/news/articles/ceqjq11202ro

jajko• 12 months ago

It doesnt have an owner who is open nazi sympathiser and doesnt wage frequent petty verbal wars with most powerful person on the planet, at least on the paper?

trump could make musk go away in a blink, literally abd figuratively. He wont do it, probably, we will see.

timmg• 12 months ago

Does xAI have a similar amount of revenue/customers? (I've personally never heard anyone talk about using it -- except on Twitter.)

christianqchung2• 12 months ago

I thought they were going for $340B?[0]

[0] https://www.cnbc.com/2025/01/30/openai-in-talks-to-raise-up-...

alexnewman• 12 months ago

Aren’t they a non profit. Do I get stock for my donation?

hodder• 12 months ago

I'd give my left nut to buy into OpenAI at this valuation. 300B is peanuts compared to where it would trade publicly, FCF and net income be damned. The growth and the optionality are there when you bring a tool this valuable to the world. This is destined to trade over 2T rapidly imo. PLTR (granted imo a bubble) trades above that, and PLTR is basically a glorified IBM/Accenture business model with mediocre growth.

adammarples• 12 months ago

If you owned 100% of OpenAI, and you weren't allowed to sell it, how would you go about using it to generate $2Tn?

rich_sasha2• 12 months ago

How much do investors make on average on VC? I mean, OpenAI is hardly a startup. But VC money can't be a one way street forever. So either:

- VC invests on the whole sensibly and makes a return that justifies 10-15 year lock-in

- VC has somehow changed and is now unsustainable, it is a one way cash flow and it will blow up like MBS did

- VC sustainably delivers mediocre returns and gets some money in, some money out, but nothing special

Im not sure which it might be.

zeroonetwothree• 12 months ago

I would bet on #3

ls612• 12 months ago

#4: VC takes more risk (in the form of portfolio volatility on longer time horizons; look at the post dot com bust returns) and since capital markets in the US are reasonably efficient they get more expected returns for that risk.

guywithahat• 12 months ago

I mean it could be the investor knows the company wants to IPO and expects to make quick cash before they go public. Given the size of the company, it could be a short term play where they expect them to IPO at 500B in the next year or two

solatic2• 12 months ago

make on average

This completely misses the boat on venture capital, which is almost by definition the riskiest of all risky bets. Any smart LP throwing $X into a fund has a portfolio valued, at the very least, at 100 if not 1000 times X. It is simply the way to expose the high-risk portion of the portfolio to that level of risk at the size of the investment needed. Being high-risk, probably it will return nothing. But it might not.

rich_sasha2• 12 months ago

It is the average that matters in the end. How much new money flows into VC per year? Some number of $1e9 - hundreds perhaps? What happens to it?

If its all a folly and the money is burnt, it cannot last. But otherwise, these VCs investing at what looks like crazy valuations can't all be idiots.

Ekaros3• 12 months ago

How often playing with someone else's money happens? Investing in the top name sounds prudent to your investors or at least is reasonably inside the lines. Then you just skim of your cut on the capital given to you to invest. And while this is happening the numbers going up makes the valuations look good. Even if all the money was already burned.

frognumber• 12 months ago

Personally, my estimate of a rational valuation would be:

$1-2T with no legal risk.

$300B assuming a rational and uncorrupt government, which should, at some point, kick them back to non-profit status, and convict people for fraud

Of course, too-big-to-fail means this won't happen.

nabla9• 12 months ago

OpenAI hits $12 billion in annualized revenue, The Information reports https://www.reuters.com/business/openai-hits-12-billion-annu...

rwmj2• 12 months ago

Don't worry, they might be making a loss on each transaction but they'll make it up in volume..

Ekaros3• 12 months ago

They have invested how much money and still not producing enough volume?

dmix3• 12 months ago

So about the same revenue as SpaceX.

hu3• 12 months ago

SpaceX is unique.

OpenAI is one of many.

raldi• 12 months ago

But what's SpaceX's revenue growth rate?

amradio1989• 12 months ago

Pretty insane valuation. It may pay off, it may not. Google search was vastly superior to its competitors. I don't think ChatGPT has that kind of edge.

This is a monopoly kind of valuation where no monopoly exists. Its like paying Microsoft billions for Internet explorer.

Personally I believe the future of AI models is open-source. The application of these models will be the real revenue driver.

cactusplant73742• 12 months ago

How would an average person even tell if ChatGPT was better than its competitors? Most people aren't running enough prompts every month to even care. Everyone knows ChatGPT and no one knows its competitors. It's going to stay like that.

derwiki• 12 months ago

I reach for ChatGPT, but if I’m on a Google property and they shove Gemini in my face, I use Gemini.

Memories are the biggest pull for me to keep coming back to ChatGPT, but I can’t imagine that’s a big moat.

jm20• 12 months ago

It's so funny. Every single time a company raises a ton of money at a large valuation, the comments are always filled with "how do they justify this valuation" or "they aren't work X...because Y and Z do the same thing".

VC math is pretty simple - at the end of the day, there's a pretty large likelihood that at least 1 AI company is going to reach a trillion dollar valuation. VCs want to find that company.

OpenAI, while definitely not the only player, is the most "mainstream". Your average teacher or mechanic uses "chatgpt" and "AI" interchangeably. There's a ton of value in becoming a vowel, even if other technically superior competitors exist.

Furthermore, the math changes at this level. No investor here is investing at a $300B valuation expecting a 10x. They're probably expecting a 3x or even a 2x. If they put in 300MM, they still end up with 600-900MM.

This isn't math on revenue, it's a bet. And if you think in terms of risk-adjusted bets, hoping the most mainstream AI company today might at least double your money in the next ten years in a red-hot AI market is not as wild as it seems.

vickychijwani3• 12 months ago

Doubling your money in 10 years is < 7.2% per year compounded. With the risks involved here, I wouldn’t take that bet. There are safer assets that would return that much.

moralestapia3• 12 months ago

Which ones, so I can acquire them.

joshka2• 12 months ago

I'm curious about how something like this affects compensation? OpenAI's compensation model is generally to use profit share instead of equity share. PPUs (Profit Participation Units) rather than RSUs (Restricted Stock Units).

joshka2• 12 months ago

I found the answer. Comp equity offers are based on the previous valuation at the last tender event. So now would still be a really good time to join OpenAI. I'm guessing this raise is likely a leading indicator of what that will trend towards in future.

reducesuffering• 12 months ago

So many comments talking about revenue, investors, profit, etc.

Remember when this company was a non-profit?! Our legal system is awful for letting this slide. The previous board was right.

pmdr• 12 months ago

It's still pretty much nil-profit.

moomin• 12 months ago

Routine reminder that if newspapers should quote the valuation implied by the debt, not the equity, in mixed deals.

nextworddev• 12 months ago

It should be on track to becoming a $1trn company

MagicMoonlight• 12 months ago

They haven’t released a new model in ages and their research seems dead in the water. People are going to get burned on all these meme stocks.

jonplackett• 12 months ago

How weird would it be though if OpenAI actually did go under. So many things are now built on top of this thing. Is it only really economically viable because it’s being subsidised by generous venture caps?

pointlessone• 12 months ago

Didn’t they promise GPT-5 this month? The one that got gold on IMO?

klysm• 12 months ago

300 billion is completely absurd

cedws• 12 months ago

I think NVIDIA's is absurder. Higher than Apple, Microsoft, Google. They're the number one for AI chips, but they're not the only company that can make them.

itsafarqueue2• 12 months ago

Doesn’t this all go to shit if they can’t flip into a for profit by December? Tons of cash commitments are tied to that far-from-finalised outcome.

lippihom• 12 months ago

Ads in answers coming with OpenAI becoming the gateway to all online shopping.

OpenAI raises $8.3B at $300B valuation

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