Artificial intelligence (AI) has arguably been the most powerful driver of the stock market in recent years. While many investors feel that valuations have gotten frothy, I also think most would agree that AI is here to stay, even if its growth path will not necessarily be linear. That's why investors are constantly on the hunt for promising AI stocks.
But among those companies fueling what some are calling the fourth industrial revolution is one important player that you can't invest in yet. But this supercharged AI company could eventually go public at a valuation of up to $1 trillion.
At the center of the AI ecosystem
The company I am referring to, of course, is OpenAI, led by Sam Altman. It's the developer of ChatGPT, the pioneer of conversational AI chatbots that can communicate in a more human-like manner than technology has ever managed before. ChatGPT also has many other capabilities, like the ability to generate digital art, code, and many varieties of written communication.
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ChatGPT has been a huge hit, which is why OpenAI is now one of the most valuable private companies in the world. While management recently said they are not focused on an initial public offering yet, as recently as October, media reports citing anonymous sources said that in late 2026, the company could begin the process that would lead to it going public at a valuation as high as $1 trillion.
Altman recently said that OpenAI had hit an annualized revenue run rate of $20 billion and hopes to be generating hundreds of billions of dollars in annual revenue by 2030. Most of its revenue comes from ChatGPT. Some reports suggest the company makes roughly 70% of its revenue by simply charging people $20 per month for the service, and I would think that it could easily increase this subscription fee over time.
OpenAI has also begun integrating third-party services such as DoorDash and Figma into ChatGPT. The company is also reportedly planning to roll out its own web browser, Atlas.
Will the company appeal to Wall Street?
According to CNBC, based on the price of shares sold in a recent private sale to investors, OpenAI is currently valued at $500 billion. The company is still losing money, though, and onlookers have had some concerns because of its heavy capital expenditure budget. OpenAI continues to pour funds into expanding its available AI processing capacity so it can scale up further.
OpenAI has reportedly committed $1.4 trillion for deals that will help build out the necessary data centers needed to fuel the AI boom. CFO Sarah Friar recently said publicly that OpenAI is seeking some kind of government guarantees as it invests so much into building out this infrastructure, a statement that some viewed as concerning. Later, however, Friar walked those comments back, clarifying that building out the necessary infrastructure for AI will require significant effort from both the public and private sectors.
Ultimately, if and when OpenAI goes public, I expect it to be a popular initial public offering, given that it's arguably the hottest company in the hottest sector. I'm sure investors will have concerns about its lack of profitability, but that particular flaw tends to get overlooked when it comes to companies that are growing revenue this fast and are already leaders in big sectors.
By the time retail investors have the opportunity to buy OpenAI stock, the company will likely be overvalued many times over based on the most common trailing valuation metrics. This doesn't mean it won't necessarily be a good long-term investment, but investors should try to avoid getting too caught up in how impressive the technology is. Every asset may have its price, but a careful consideration of valuation should always be part of your investing process.
