Few companies have taken the world by storm quite like OpenAI. The company's ChatGPT chatbot has become a viral sensation. It had amassed more than 180 million users by late 2023.
You can't invest directly in OpenAI -- at least, not right now. However, there are several ways to invest indirectly in the ChatGPT creator. You can also invest in companies that stand to benefit from the explosion in artificial intelligence (AI) that OpenAI has helped ignite.
In this article, we'll explain all you need to know about investing in OpenAI.
Artificial Intelligence
Will it IPO?
When will OpenAI IPO?
Many successful private companies decide to conduct an initial public offering (IPO) to raise additional capital to fuel their growth. However, going public doesn't appear to be on the horizon for OpenAI.
In June 2023, OpenAI CEO and co-founder Sam Altman said that his company has no plans to conduct an IPO. That likely won't change while he's running the company. While the company briefly fired him in late 2023, he quickly rejoined OpenAI after a firestorm of criticism.
There are two primary reasons behind this reluctance to go public. First, OpenAI doesn't seem to need additional capital at this point -- Microsoft (MSFT 1.82%) agreed to invest another $10 billion into the company in early 2023. Second, the company is concerned that listing its shares on a public stock exchange could limit its ability to develop AI fully.
In particular, OpenAI has committed to developing artificial general intelligence (AGI) and AI super intelligence -- technology that is self-aware and possesses intelligence that far exceeds that of the smartest human. Altman said, "When we develop superintelligence, we are likely to make some decisions that most investors would look at very strangely."
How to invest
How to buy OpenAI stock
The simple answer to how to buy OpenAI stock is that you can't right now. And there's no timeline for when you might be able to do so. However, the next best thing is to buy the stocks of other publicly traded companies investing in OpenAI or benefitting from its growth. Here are three stocks you can buy to indirectly invest in the ChatGPT developer's growth.
1. Microsoft
The best way to invest in OpenAI is to buy shares of Microsoft (MSFT 1.82%). The technology giant originally invested $1 billion in OpenAI in 2019. It also teamed up with OpenAI to develop new AI supercomputing technologies for its Azure cloud platform. OpenAI moved its services to the Azure platform as part of the agreement. Microsoft also became OpenAI's preferred partner for marketing new AI technologies.
In 2021, Microsoft upped its investment in OpenAI. Then came the firestorm created by the launch of the AI chatbot ChatGPT in late 2022. Microsoft quickly realized the opportunity at hand. In January 2023, the company confirmed that it extended its partnership with OpenAI into a third phase. A key component of the expanded collaboration was that Microsoft Azure would become OpenAI's exclusive cloud provider.
Microsoft didn't reveal exactly how much additional money it invested in OpenAI in its third round of funding. However, several reports indicated that Microsoft poured another $10 billion into OpenAI. Under the terms of the deal, Microsoft reportedly will receive 75% of OpenAI's profits until it recovers its full investment. After that point, Microsoft would own a 49% stake in the smaller AI developer.
In 2023, Microsoft aggressively integrated OpenAI's technology into its applications. Microsoft's Bing search engine uses GPT-4, the most advanced AI large language model (LLM) released by OpenAI so far. The "new" Bing initially caused a stir with its sometimes bizarre responses, leading Microsoft to take steps to minimize the odd replies.
Microsoft also introduced OpenAI technology into its Microsoft 365 productivity apps. The new feature, Microsoft 365 Copilot, helps users generate first drafts of documents in Microsoft Word and new presentations in Microsoft PowerPoint.
Copilot enables users to quickly analyze trends in Microsoft Excel and easily create high-quality data visualizations. It summarizes email threads and suggests replies to emails in Outlook. It summarizes discussion points in the Microsoft Teams business communications platform and recommends action items.
Of course, besides its ties with OpenAI, there are other reasons to consider investing in Microsoft stock. The company ranks as a leader in several hot technology areas beyond AI, notably cloud services, gaming, and quantum computing.
2. Infosys
India-based information technology (IT) consulting company Infosys (INFY -0.41%) was one of the earliest investors in OpenAI. In 2015, Infosys' then-CEO Vishal Sikka revealed in a blog post that his company had helped fund the then-nonprofit AI developer. Sikka said Infosys would eventually be able to benefit from OpenAI's technology.
His prediction proved to be correct. Infosys co-founder and chairman Nandan Nilekani said at the company's June 2023 annual meeting that Infosys has embraced an "AI-first strategy." Although he didn't specifically mention OpenAI or Infosys' investment in the AI pioneer, Nilekani noted the recent "advances in generative AI," which is the use of AI to generate original content and was mainstreamed by ChatGPT.
Generative AI
In May 2023, Infosys launched its Topaz platform. The company referred to Topaz as "an AI-first set of services, solutions, and platforms using generative AI technologies." The new product helps clients analyze data quickly. Infosys CEO Salil Parekh said at the June meeting that the company has 50 active client projects using generative AI.
3. Nvidia
Nvidia (NVDA 6.18%) isn't a direct investor in OpenAI. However, the semiconductor stock is a major beneficiary of the AI megatrend.
The company experienced a massive acceleration in demand for its chips in 2023 as customers raced to capitalize on the AI gold rush. Nvidia's revenue skyrocketed 206% in its fiscal third quarter of 2024 to a record $18.1 billion, driven by record data center revenue (up 279% year over year to $14.5 billion). That surging revenue drove a stunning 12-fold increase in its earnings.
"Our strong growth reflects the broad industry platform transition from general-purpose to accelerated computing and generative AI," CEO and founder Jensen Huang said in the company's third-quarter earnings press release.
The company sees more growth ahead. Huang stated, "Large language model startups, consumer internet companies, and global cloud service providers were the first movers, and the next waves are starting to build." Because of that, Huang noted, "AI foundry services and Nvidia AI Enterprise software are all growth engines in full throttle. The era of generative AI is taking off."
Profitability
Is OpenAI profitable?
OpenAI doesn't release its financial statements, so we don't have access to details about OpenAI's earnings. However, The Information reported in May 2023 that OpenAI is currently not profitable.
The online news site reported that OpenAI's losses were close to $540 million in 2022, roughly doubling from the previous year, according to three unnamed sources familiar with the AI company's financials.
However, OpenAI is growing its revenue briskly. It has grown its monthly revenue run rate to more than $100 million (about a $1.3 billion annualized rate), according to an article by The Information in late 2023. That's light years more than its revenue in 2022, which totaled a meager $28 million for the entire year.
Cloud Computing
Initially, OpenAI was organized as a nonprofit company. However, to raise the capital needed to fund its aggressive development plans, the company revised its structure to a hybrid for-profit/nonprofit it calls a "capped-profit" company. Under the structure, investors and employees of OpenAI will be able to participate in profits up to a defined cap.
Should I invest?
Should I invest in OpenAI?
Although there's no pure-play way to invest in OpenAI now, many long-term investors might want to consider indirect alternatives. In particular, buying shares of Microsoft could be a smart strategy to profit from OpenAI's technology. No other stock has as strong of a link to OpenAI.
Generative AI, such as OpenAI's GPT-4, will likely be a game-changing technology. Global consulting firm McKinsey & Company predicts generative AI could have an economic impact of as much as $4.4 trillion annually. That amount is larger than the current gross domestic product (GDP) of all but three countries – the U.S., China, and Japan.
Investors should also consider buying other AI stocks that could benefit from the generative AI boom. For example, Nvidia makes graphics processing units (GPUs) ideal for powering AI apps. Nvidia's GPUs could enjoy strong demand even if an OpenAI rival, such as AutoGPT, ultimately achieves greater success. The downside to buying Nvidia is that huge growth expectations are already baked into its share price.
You could also look into buying stocks of companies using AI. Salesforce (CRM 0.42%), for example, integrated with OpenAI to develop Einstein GPT, which generates content for customer relationship management functions. Another possibility is Atlassian (TEAM -9.56%), which partnered with OpenAI to integrate generative AI into its products.
Machine Learning
ETFs
ETFs with exposure to OpenAI
If you aren't comfortable picking individual stocks, you could invest in an exchange-traded fund (ETF) that focuses on AI and machine learning. Top AI ETFs include:
The bottom line on OpenAI
OpenAI definitely stands out as one of the leaders in generative AI. ChatGPT isn't likely to be a temporary fad. The power of OpenAI's technology could help usher in a new era where AI plays a much greater role in almost every aspect of society. Although you can't invest directly in OpenAI, you can buy the stocks of companies that stand to profit from its advances in AI.
FAQs about OpenAI
How do I buy OpenAI stock?
You can't buy OpenAI stock because it hasn't listed its shares on any stock exchange at this point. The company has not announced plans to go public, either. The best alternatives available to investors are to purchase shares of companies that have invested in (such as Microsoft) or partnered with OpenAI (such as Salesforce).
Is OpenAI listed on the stock market?
OpenAI isn't listed on the stock market. It remains a privately held company with no plans of going public.
Can I buy ChatGPT stock?
You can't buy ChatGPT stock or the company behind it (OpenAI). OpenAI is a privately held company. It had no plans to go public by completing an IPO.
How can I buy AI stocks?
Many companies focused on AI trade on stock exchanges. Notable AI stocks include Microsoft, Nvidia, and Salesforce. You can buy shares of any one of those companies through a brokerage account. You'd need to open and fund a brokerage account (if you haven't already done so), fill out the order page, and submit your trade to invest in one of those AI stocks.
