ChatGPT maker OpenAI is seeking a lofty valuation between $80 and $90 billion in its latest share sale. As per a Wall Street Journal report, the company is seeking to sell shares of existing employees instead of issuing new shares. The latest valuation pegs the company to nearly triple its value compared to what it was in January of this year and puts into perspective the unmatchable popularity of artificial intelligence (AI) tools.
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The report suggests that OpenAI is telling investors that it could earn $1 billion in revenue in 2023 and much more in 2024 thanks to the growing demand for ChatGPT tools. The basic version of ChatGPT is freely available, while the more sophisticated version used in businesses is chargeable. At the same time, OpenAI also earns revenue by licensing the large language models (LLMs) behind the AI chatbot to other businesses. The launch of ChatGPT in November 2022 ignited a heated competition in the AI space, which has propelled large tech giants to launch their own models.
OpenAI Updates Existing Models
OpenAI is seeking to roll out higher and more powerful versions of ChatGPT in the days ahead. Recently, OpenAI updated the ChatGPT model to enable it to see, hear, and talk. Moreover, the firm also introduced DALL-E 3, its upgraded version of the existing text-to-image AI tool. This tool is currently in research preview and will be available to ChatGPT Plus and Enterprise customers in October.
Its hefty valuation makes it the third-most highly valued startup, behind billionaire Elon Musk’s SpaceX and TikTok owner ByteDance. The company could resort to further share sales in the future to keep its computing costs and other maintenance costs in place. Notably, the current valuation will ensure that any future share sale will earn at least more than this value.
Tech Players are Investing Billions in AI
Microsoft (NASDAQ:MSFT) has invested billions of dollars in OpenAI and owns roughly 49% of the company. Further, private equity firms such as Sequoia Capital and Khosla Ventures have also bought stakes in OpenAI through tender offers. In January, when Microsoft invested tens of billions in the firm, OpenAI was valued at approximately $30 billion. The latest share sale will show substantial paper profits in Microsoft’s books.
Its hefty valuation makes it the third-most highly valued startup, behind billionaire Elon Musk’s SpaceX and TikTok owner ByteDance. The company could resort to further share sales in the future to keep its computing costs and other maintenance costs in place. Notably, the current valuation will ensure that any future share sale will earn at least more than this value.
In the meantime, Alphabet (NASDAQ:GOOGL, GOOG) is building and awaiting the launch of its generative AI model called Gemini, which could be an apt rival for ChatGPT. Also, Meta Platforms (NASDAQ:META) is working on building an open-source AI model that could compete with OpenAI’s ChatGPT-4 model. Reports also suggest that Microsoft is aiming to build its own AI models and has dispatched a 1,500-researcher-strong team to build a conversational AI. Next, e-commerce giant Amazon (NASDAQ:AMZN) announced its decision to invest up to $4 billion in Anthropic, an OpenAI rival, to boost its aggressive push into the lucrative AI market and keep pace with other tech giants.
What are the Best AI Stocks to Invest In?
Let us see how some of the AI stocks perform based on the TipRanks Stock Comparison Tool.
Most of the stocks earn an outperform Smart Score of 8 or 9. Meanwhile, Amazon, Alphabet, Meta, and Microsoft have a Strong Buy consensus rating.
