OpenAI's Historic US$1tn IPO Plan and the Looming AI Bubble

It's shaping up to be a big year for AI firms as they look to go public, with SpaceXAI, Anthropic and OpenAI all seeking to make their stock market debuts.

Rejuvenated after securing a decisive court victory over Elon Musk in a landmark AI trial, OpenAI appears to be preparing the ground for what could become one of the largest IPOs in history – potentially valuing the company at up to US$1tn.

Reuters and The Wall Street Journal (WSJ) report that OpenAI is planning to confidentially file IPO paperwork in the coming weeks, with a September 2026 listing in mind.

OpenAI has already raised US$186bn, according to data from PitchBook, making an ascent into public markets a natural next step for the trailblazing startup. 

The timing is crucial, with the incumbent SpaceX IPO – slated to happen as early as June – representing a yardstick to test investor appetite in AI. 

If SpaceXAI manages its eye-watering US$1.75tn valuation, OpenAI – whose ChatGPT comprises 54% of Gen AI traffic compared to the 3% commanded by Grok, according to Similarweb’s April data – could see its valuation skyrocket even further.  

Advice from banking giants

Industry reports suggest that major investment banks including Goldman Sachs and Morgan Stanley are advising OpenAI on the draft IPO offering.

OpenAI was most recently valued at roughly US$852bn after a massive private fundraising round.

Reuters previously reported the company could seek to raise at least $60 billion in an IPO, though discussions remain preliminary. That confidence is already pushing up the price of SoftBank shares, which climbed 4.6% in Tokyo’s exchange. 

SoftBank is one of OpenAI’s biggest investors, with plans to own about 13% of the company by October, CNBC notes. 

The IPO would likely become the defining public-market test of the Gen AI boom.

Profitability test 

Despite the explosive growth and adoption of Gen AI, OpenAI is still burning more cash than it is bringing in. 

To its credit, the firms says ChatGPT now has more than 900 million weekly active users and at least 50 million subscribers, but has reportedly missed some internal revenue and user-growth targets ahead of the IPO push. Internally, OpenAI is targetting one billion weekly ChatGPT users. 

CFO Sarah Friar has reportedly expressed concern that the company might be unable to pay for essential computing contracts if revenue doesn’t grow fast enough.   

However, CEO Sam Altman told Reuters this assertion was "ridiculous," adding "we are totally aligned ‌on ⁠buying as much compute as we can and working hard on it together every day". 

Elsewhere, OpenAI is facing intense competition from rivals including Anthropic and pressure to secure even larger pools of capital for computing infrastructure.

BofA’s Bubble concerns

The concentration of tech stocks in the S&P 500 would reach 48% post the mega trifecta of IPOs by SpaceXAI, Anthropic and OpenAI, according to Michael Hartnett, Managing Director and Chief Investment Strategist at BofA Securities.

“Strong price action, retail mania, slumping vol … so bubbly,” Michael told The Flow Show. 

"Add mega IPOs to AI big boys and market concentration easily surpasses (~48%) bubbles of roaring ‘20s, Nifty 50 ‘70s, Japan ‘80s, TMT ‘90s."

Naturally, OpenAI's plan to go public has prompted many to recall Netscape's IPO in 1995, which was seen as a watershed moment in the context of the 1990s tech bubble, although the peak wasn’t achieved until much later.

As well as representing a financial milestone for the company, OpenAI’s IPO looks set to reveal investor appetite for Gen AI – and whether the technology can evolve from capital-intensive technology boom into a sustainable, profitable industry.

The alternative could be a moment that analysts refer to in future as a watershed moment for the AI bubble.