designer491 / iStock via Getty Images
Now that OpenAI can be a for-profit company, it can have an initial public offering. Reuters reports that the target market cap from the transaction is a $1 trillion valuation, which it will use to raise $60 billion. The IPO could be as early as the second half of 2026, or it may be delayed a quarter or two to 2027, depending on the overall stock market. At $1 trillion, it would be worth as much as Berkshire Hathaway.
If anyone needs proof that the AI-driven stock market is frothy, it is this $1 trillion figure. In the first half of the year, OpenAI lost $13.5 billion, on revenue of $4.3 billion. It is on track to lose $27 billion for the year. One estimate shows OpenAI will burn $115 billion by 2029. It may not make money until that year.
The risk to the $1 trillion figure falls into several categories. The first is whether the company will ever make money. To some extent, this depends on how many other companies will make money on artificial intelligence. Most people use it for free. AI has already been integrated into products at large tech companies like Microsoft, Amazon, and Meta. Among them, they have committed to tens of billions of dollars in investment, most of which will go to huge data centers. Revenue from AI is not the same as profits. It could take years for tech companies to prove AI integration can actually make money.
Another possible hurdle is how long financing companies and utilities will support AI infrastructure. Investment juggernaut Brookfield is putting billions of dollars into data centers. Utilities like Constellation Energy are also making huge investments. If AI does not produce a profitable business model, these companies will need to answer to shareholders, who will only be patient for so long.
AI faces another hurdle it may be unable to clear. Its data centers are energy hogs. Early evidence hints that this raises residential electricity rates. There has already been pushback. In some parts of the country, AI competing for electricity is already a part of political campaigns. NBC News recently pointed out that candidates face the electricity price increase in Pennsylvania and Maryland. The news network reported the issue could be part of the midterm elections.
Another question about OpenAI is whether AI valuations in general can hold up. Nvidia Corp. (NASDAQ: NVDA) was the first public company to have a valuation of $5 trillion. That is entirely based on the future success of the AI economy. Its stock price is up 1,552% in the past five years. The broader market is up 111% over the same period. Investors have increasingly started to compare this to the dot-com bubble. If that comparison is true, Nvidia’s stock could drop 50% or more. That will ripple across the AI industry and affect the valuation of an OpenAI IPO negatively.