OpenAI Becomes World's Most Valuable Startup After $500 Billion Valuation (yahoo.com) 49
OpenAI's valuation has surged to $500 billion after a $6.6 billion secondary stock sale, briefly making it the world's most valuable startup ahead of SpaceX and ByteDance. The Associated Press reports: Current and former OpenAI employees sold $6.6 billion in shares to a group of investors, pushing the privately held artificial intelligence company's valuation to $500 billion, according to a source with knowledge of the deal who was not authorized to discuss it publicly. The investors buying the shares included Thrive Capital, Dragoneer Investment Group and T. Rowe Price, along with Japanese tech giant SoftBank and the United Arab Emirates' MGX, the source said Thursday.
The valuation reflects high expectations for the future of AI technology and continues OpenAI's remarkable trajectory from its start as a nonprofit research lab in 2015. But with the San Francisco-based company not yet turning a profit, it could also amplify concerns about an AI bubble if the generative AI products made by OpenAI and its competitors don't meet the expectations of investors pouring billions of dollars into research and development.
The valuation reflects high expectations for the future of AI technology and continues OpenAI's remarkable trajectory from its start as a nonprofit research lab in 2015. But with the San Francisco-based company not yet turning a profit, it could also amplify concerns about an AI bubble if the generative AI products made by OpenAI and its competitors don't meet the expectations of investors pouring billions of dollars into research and development.
What is a start-up? (Score:3)
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A start-up is any company that is funded by investor money with aspirations to go public in order to obtain more investor money. That's what my observations indicate anyway. It's not like a checkbox on an official form or anything.
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Didn't OpenAI make 300 million revenue monthly last year, before operating costs of 5 billion? Seems a long way to 500 billion today. Although the USD is dropping, maybe the investors factored that in:)
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That $500 billion is its *valuation* (share price times number of shares), not its revenue.
Yes, a startup is a new-ish company that is not yet profitable (which OpenAI is not) but hopes to become profitable in the future.
Re: What is a start-up? (Score:2)
Why doesn't $6 billion in profits from stock sales count as revenue?
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The main difference between a startup and an established company, is that a startup has yet to turn a profit. Microsoft and Apple have been operating at a profit for decades. OpenAI is still operating at a loss, requiring investor money to continue operations, in hopes of one day turning a profit.
Re: What is a start-up? (Score:2)
Is Tesla profitable without regulatory credits?
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Barely. But Tesla is a publicly traded company that uses revenues (whatever the source) to fund its operations. It is not issuing new stock to fund its operations, hoping for eventual profitability. The last time it issued stock was in 2020.
If Tesla has to again issue stock to fund its operations due to the loss of government tax credits, that won't make them a startup, it will instead make them an unprofitable company trying to right itself.
Re: What is a start-up? (Score:2)
Do you see the irrationality in an unprofitable company having such a high stock market valuation?
Remember the old trader joke about fundamentals being whatever does not move price?
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Yes of course. It's a highly irrational price. Did someone argue otherwise?
Re: What is a start-up? (Score:2)
How does that irrationality not permeate every price, so that inflation becomes purely psychological noise easily solvable by indexation?
Bubble, bubble, toil and trouble. (Score:4, Interesting)
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Yeah this time is different
*politically incorrect retard gestures*
Re: Bubble, bubble, toil and trouble. (Score:2)
How much higher is the stock market today than when any bubble popped? Are bubbles just psychological events while buy-and-hold strategies continue reaping record highs?
Re: Bubble, bubble, toil and trouble. (Score:3, Funny)
Follow the link I posted for the methodology for calculation of the 17x. And if it does fall down under your 'scrutiny' please do post your 'logic' so we can all laugh at it.
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AI investing may resemble a bubble but to extend that claim universally is misleading and dismisses the long term structural demand that distinguishes AI from purely speculative manias of the past.
This AI slop is actually an interesting comment and may be pointing in the direction of the real fear of the AI pushers. We were specifically comparing the dot-com bubble with the AI bubble. With dot-com companies like Amazon, Google and Ebay came out which actually did make money. That meant that the dot-com collapse was nowhere near as bad as it could have been. When we look at the Amsterdam tulip bubble, which had a lack of serious underlying need (nice though tulips are) the collapse could be much more
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Funny how new technology that is heralded to elevate the little guy ends up eliminating all the little guys. It ends up growing giants instead.
Re: Bubble, bubble, toil and trouble. (Score:2)
What if there's a better way involving basic income, less patent and copyright protection, and sovereign wealth funds to pay for it all as markets bid each other higher and higher, with the Fed acting as value buyer in crashes?
Re: Bubble, bubble, toil and trouble. (Score:2)
ChatGPT's comment:
What I like about your take is that it shifts the focus from "giants will eat everyone" to "we could change the rules." Basic income, looser IP monopolies, and sovereign wealth funds would spread the gains instead of letting them pool at the top. The idea of the Fed acting as a buyer in downturns also flips the script: instead of taxpayers bailing out private bubbles, the public could capture value on the cheap. It's not that bubbles go away, but who benefits from them could be very differ
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A popping bubble never hurts the big ones. Microsoft, Apple, OpenAI, Nvidia, Google, Meta, none of them will be hurt. A thousand startups that hoped to sell a new AI based idea will lose out. What mostly means bad luck to their investor (that's why it is called risk capital) and the end of their company, but not the end of their lifes.
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Meta didn't become one of the most valuable companies on this planet because Facebook was good for productivity.
Re: Bubble, bubble, toil and trouble. (Score:2)
Did you just unravel the rational assumption behind mainstream economics, and if so why do we still treat prices as rational rather than noise?
Re: Bubble, bubble, toil and trouble. (Score:3)
The AI bubble is 17 times the size of the dot-com frenzy
Sure, if you ignore inflation and other factors. If you look at other figures and adjust for inflation it's around the same size.
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What are these ominous "other factors" you hand wave into existence?
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After the dot com bubble, the usage of Internet has increased, not decreased. I agree that there will be companies that will crash, simply because they can't do anything novel. OpenAI will be one of those companies. But the AI solutions themselves are here to stay and increase.
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But the AI solutions, which work themselves are here to stay and increase.
FTFY. minor but important change. Cuecat is never coming back. The cuecats of AI are likely very very many.
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They're a producer of SOTA models, and are frequently the best performing model.
Watch out for that first step (Score:1)
That's going to be a big crash.
Just demonstrates that valuations are nonsense (Score:2)
Seriously.
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It's like there are at least two layers of funny money accounting going on here.
First, you have the strange way that people equate market cap with value. There's no guarantee that holding shares with a current market value of $X will eventually return $X or more in dividend payments plus maybe some eventual disposal of assets, and these are usually the only tangible values involved. A market cap based on ludicrously high P/E ratio will be high, but trading those shares is like trading Bitcoin: it starts to
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Indeed. But even Nvidia is running a high risk, because they could/will lose tons of investments when the bubble bursts. Their survival seems likely but is not assured.
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It really depends on the brilliance of the financial engineering inside the company. Sun Microsystems ended up dead. AOL shareholders, on the other hand ended up owning Time Warner, which was a pretty good deal long term.
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The knock off effects are gonna be interesting, the kinda guys who are obsessed with AI tend to have a lot of meme stocks and crypto too. A bunch of them are probably going to sell that stuff when then lose a bunch on nvidia. Tesla and crypto are already really popular but questionable.
It would almost be amusing but I'm not excited about what tesla shaped hole might get left in my 401k
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My rule is to never gamble with anything I cannot easily afford to lose.
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Probably a lot of people that bet on this stuff think it's "the future" and not a gamble at all.
People are fucking retarded and a lot of people's first introduction to investing is getting duped by propaganda promoting some scam.
Often the information they work with isn't even very wrong, it's just that they know nothing and someone came by and filled that hole with truthful information that suits their needs.
They never even see it coming when the bubble pops.
Re: Just demonstrates that valuations are nonsense (Score:2)
What if you can hold on until the next, much much bigger bubble? Why ignore the upward trend in stock market valuations, despite occassional blips that you myopically focus on while ignoring the bigger picture?
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Well i think that's what the big dogs are doing but small time investors and our 401ks are gonna take huge hits.
Go ahead and look at stuff around the time of the 2008 crash, the price of gold, guys making bets against the housing market. They fucking knew and got ready before all us normal people lost homes or had a chunk of our 401k wiped out.
Then afterward they started hyping gold up to retarded boomers with shitty ads and propaganda on the financial news .... all so the rich guys could unload their inve
Re: Just demonstrates that valuations are nonsens (Score:2)
Wasn't the depression solvable by money printing? Why hold on to fetishes about inflation when we can index it away?
If you have a wealth fund that can hold through dot-com crashes and the ensuing much much higher recovery, while making distributions through the crash period, can we solve our basic income funding issue, without needing taxes?
Cannot wait this this bubble pops. (Score:2)
Gonna be glorious.
It's the user count and growth rate (Score:3)
ChatGPT alone had 122 million daily users back in February and now it's 190 million, with 700 million weekly users.
"usage growing 4X year over year". "daily user messages surpassed three billion".
"OpenAI now counts five million paying business users, up from three million in June"
"OpenAI’s annual recurring revenue is now at $13 billion, up from $10 billion in June, with the company on track to surpass $20 billion by year-end."
https://www.cnbc.com/2025/08/0... [cnbc.com]
The investors buying the shares included SoftBank (Score:2)