OpenAI hits $500 billion valuation as AI euphoria deepens

OpenAI’s reported $500 billion valuation has ignited intense speculation about the state of the artificial intelligence sector, with many observers drawing comparisons to historic investment frenzies. The valuation, which marks a significant increase from an earlier estimate of $300 billion, comes amid a broader wave of high-profile funding rounds and product launches in the AI space. This week, OpenAI, led by Sam Altman, announced the long-awaited GPT-5 and a major U.S. government partnership, further fueling expectations about its market potential.

The valuation surge reflects a broader trend in the venture capital market, where top-tier AI companies are commanding eye-catching numbers. For instance, Anthropic is reportedly heading toward a $170 billion valuation, while Perplexity is valued at $18 billion, and Elon Musk’s xAI is aiming for $200 billion. Nnamdi Okike, cofounder and managing partner of 645 Ventures, has noted that these rapid valuation increases signal classic signs of market euphoria. “Many companies are raising huge amounts of money in very short periods of time,” he told Fortune. “Even when there’s fundamental substance behind the rounds, that means there’s typically some dislocation.”

Okike emphasized that while the AI sector is attracting a significant portion of venture capital—37% of July's $29.7 billion global venture funding—only a few companies are likely to emerge as true long-term winners. “History teaches us that when valuations go up very rapidly, when round sizes and valuations are higher than they’ve ever been, those signs indicate euphoria,” he said. “They indicate potential bubble-like qualities, and that investors should be very careful when rounds and prices increase as quickly as they’re increasing.”

Despite these concerns, OpenAI stands out as a potential outlier. Okike sees the company as a long-term winner but cautions that the broader market is at risk of overvaluation. The contrast between OpenAI’s potential and the rest of the sector highlights the growing divide between AI “superstars” and the many startups that may struggle to maintain traction.

As the sector continues to evolve, the $500 billion valuation of OpenAI will likely remain a key benchmark for evaluating the sustainability of the current AI boom. The coming months will be critical in determining whether this valuation is justified or if the market is on the path to a correction [1].

Source: [1] OpenAI’s reported $500 billion valuation signals AI euphoria (https://fortune.com/2025/08/08/openais-reported-500-billion-valuation-signals-ai-euphoria/)