OpenAI's $1T IPO: Betting on AGI Despite $40B Loss Projections

OpenAI, the artificial intelligence company behind ChatGPT, is preparing for an initial public offering (IPO) that could value the firm at up to $1 trillion, according to three people familiar with the matter. The proposed listing, one of the largest in history, would allow OpenAI to raise at least $60 billion, with some advisers suggesting an even higher amount, to fund its ambitious AI infrastructure plans. The company could file with securities regulators as early as the second half of 2026, aiming for a public market debut by late 2026 or 2027, according to The Economic Times.

The IPO follows a major restructuring that reduced OpenAI's reliance on Microsoft, its long-time partner and cloud computing provider. Under the new agreement, Microsoft and the OpenAI Foundation each hold just over a quarter of the company, while other investors, including employees, own the remainder. Microsoft retains rights to sell OpenAI's enterprise tools but no longer has exclusive control over consumer products or cloud infrastructure. The deal also commits OpenAI to spending $250 billion with Microsoft's Azure cloud unit over five years, alongside paying Microsoft 20% of its revenue until the company achieves "artificial general intelligence" (AGI), according to Reuters.

Financially, OpenAI faces significant challenges despite its $500 billion valuation. The company's annualized revenue run rate is expected to reach $20 billion by year-end, but losses are mounting as it invests heavily in AI development. CEO Sam Altman has acknowledged the need for public funding, stating, "I think it's fair to say it is the most likely path for us, given the capital needs that we'll have." OpenAI's internal projections, cited in an analysis by Kai Williams, suggest the firm could face peak negative cash flow of over $40 billion by 2028, with positive cash flow not expected until 2030.

The IPO would enable OpenAI to raise capital more efficiently and finance large acquisitions, supporting Altman's vision of pouring trillions into AI infrastructure. However, analysts warn that the sky-high valuation could overheat the AI market. "An IPO is not our focus, so we could not possibly have set a date," an OpenAI spokesperson said, emphasizing the company's mission to advance AGI. Meanwhile, the IPO's timing aligns with a broader AI boom, as tech giants like Google, Microsoft, and Amazon invest record sums in data centers and AI chips.

OpenAI's potential listing has already triggered market speculation, with some analysts comparing its valuation to tech titans like Apple and Microsoft. The company's restructuring and IPO plans underscore its ambition to lead the AI race, even as it navigates financial risks and competition from rivals like Anthropic and Google.