Key Highlights
- OpenAI is discussing a $500 billion employee share sale, which would allow current and former staff to cash out
- The company has already secured $8.3 billion of its $40 billion funding goal
- Rival Anthropic is racing to close $3-$5 billion in new funding at a $170 billion valuation
OpenAI, the artificial intelligence company behind ChatGPT, is in early talks for an employee share sale that could value the company at a whopping $500 billion, according to a source familiar with the matter.
If finalized, the deal would become a massive leap from OpenAI’s current $300 billion valuation, which shows its explosive growth in revenue, user base, and dominance in the AI arms race.
The proposed transaction would let current and former employees sell billions in shares before a potential IPO, which is a move that shows the fierce competition among tech giants to lock down top AI talent.
ChatGPT Sees Meteoric Rise
OpenAI’s success is largely fueled by ChatGPT, which now holds 700 million weekly active users, up from 400 million in February. Revenue has doubled in the first seven months of 2024, hitting an annualized run rate of $12 billion, with projections nearing $20 billion by year-end, the source added.
Microsoft-backed OpenAI is also in the midst of a $40 billion funding round, led by Japan’s SoftBank Group. While SoftBank has until December to commit its $22.5 billion share, the rest of the round has already been secured at the $300 billion valuation.
The tech industry is in an all-out battle for AI experts, with companies offering sky-high pay packages to lure top minds. Meta (formerly Facebook) is reportedly pouring billions into poaching Scale AI’s 28-year-old CEO, Alexandr Wang, to lead its new superintelligence division.
Private firms like ByteDance (TikTok’s parent company), Databricks, and Ramp have also used similar share sales to reward employees and adjust valuations without going public.
IPO Soon?
OpenAI is reportedly restructuring its business model, moving away from its current “capped-profit” approach to pave the way for a future IPO. However, CFO Sarah Friar cautioned in May that any public offering would only happen when the “company and markets are ready.”
Existing investors, including Thrive Capital, are in talks to join the employee share sale.
As OpenAI’s valuation soars, the AI gold rush is far from over, and the biggest players are willing to pay top dollar to stay ahead.
OpenAI’s GPT-5 Nears Release
OpenAI’s most-awaited GPT-5, the next evolution of the AI behind ChatGPT, is set to drop soon. However, early testers say its improvements over GPT-4 may not be as dramatic as past upgrades.
(Source: Pash on X)
Two users who tried the model under non-disclosure agreements told Reuters that while GPT-5 excels in coding, math, and science tasks, the jump from GPT-4 isn’t as stark as the leap from GPT-3 to GPT-4. OpenAI declined to comment.
GPT-4’s success came from massive computing power and data. But OpenAI hit roadblocks this time: high-quality training data is running dry, and lengthy “training runs” risk hardware failures without guaranteed results.
Former chief scientist Ilya Sutskever warned last year that while processing power grows, usable data is not keeping pace.
Despite these challenges, the AI world is buzzing. Boris Power, OpenAI’s head of applied research, stated on X: “Excited to see how the public receives GPT-5.”
Investors like Navin Chaddha of Mayfield Ventures (not an OpenAI backer) hope GPT-5 will push AI “beyond chat into fully autonomous tasks.”
Since GPT-4 aced the bar exam’s top 10% in 2023, rivals like Google’s Gemini and Anthropic’s Claude have closed the gap. Even open-source models like Meta’s Llama 3 now compete. GPT-5’s release, expected any day, will test whether OpenAI can stay ahead.
According to the latest report, the global AI platform market is expected to soar from $18.22 billion in 2025 to $94.30 billion by 2030.
