As an AI practitioner who’s worked in machine learning for over a decade, I’ve been astonished at the meteoric rise of ChatGPT. Almost overnight, this chatbot has captivated people’s imagination in a way we’ve never seen before in artificial intelligence.
So when I get asked these days about when ChatGPT will finally go public, it tells me that interest is hitting a fever pitch. And as an insider, I feel compelled to share my perspective.
In this article, I’ll give you an objective expert’s take. We’ll dive into OpenAI’s background, competitive positioning, market landscape, financials and valuation benchmarks relative to other AI stocks.
Let‘s get into the meaty stuff!
The Backstory: Funding Fuels OpenAI’s Stellar Rise
Founded in 2015 with early backing from tech moguls like Elon Musk and Peter Thiel, OpenAI’s mission was lofty – create safe artificial general intelligence (AGI) to benefit humanity.
Over the years, OpenAI has raised over $1 billion across 4 rounds of funding from bluechip Silicon Valley investors like Khosla Ventures and tech giants Microsoft and Amazon:
| Date | Amount Raised | Lead Investors | Valuation |
|---|---|---|---|
| 2015 | $1 billion | Sam Altman, Elon Musk, Peter Thiel, LinkedIn founder Reid Hoffman and Stripe founders Patrick and John Collison | – |
| 2019 | $1 billion | Microsoft | $2 billion |
| 2021 | – | Microsoft | $29 billion |
| 2022 | – | Microsoft | $29 billion |
This massive warchest has enabled OpenAI to recruit elite AI talent and aggressively pursue cutting-edge research.
And their work has already born spectacular fruit recently in the form of ChatGPT and Dall E – conversational AI tools that stunned the world with their humanizing capabilities.
After witnessing the incredible momentum ChatGPT gathered within just days, I knew right away OpenAI was building towards an IPO.
OpenAI‘s Position Against New Generative AI Rivals
Generative AI represents an evolution in models being able to synthesize brand new, high-quality output based on learning patterns from vast datasets – whether text, code, images or video.
So how does OpenAI stack up amongst a crowded competitive field filled with impressive new alternatives?
Competitor Benchmarking
| Company | Key Offerings | Funding Raised | Lead Investors |
|---|---|---|---|
| OpenAI | ChatGPT, DALL-E 2, Codex | $1 billion+ | Microsoft, Khosla Ventures |
| Anthropic | Claude | $700 million | Dustin Moskovitz |
| Alphabet | PaLM | – |
Amongst these players, OpenAI seems best positioned currently in my eyes due to these key strengths:
- Integrations – Seamless integration of APIs allows easy embedding of ChatGPT’s advanced conversational abilities into any application.
- Capital – With billions in funding from Microsoft and access to Azure infrastructure, OpenAI can afford immense compute expenses required to run complex models – a restrictive barrier for most startups.
- Velocity – Sheer pace of cutting-edge research output across domains like language, robotics and computer vision.
So while rivals scramble to catch up on capabilities, OpenAI continues pushing the boundaries further.
Analyzing the Market Potential for Conversational AI
The appetite for conversational interfaces keeps expanding as companies integrate such tools for automated customer support, sales & marketing assistance etc.
Per Gartner, spending on conversational AI platforms touched $3.3 billion globally in 2022 – a growth of 50% from prior year. They project investment by enterprises will reach $13.9 billion by 2027 indicating massive headroom.
No wonder businesses like Microsoft, SAP, Slack, Salesforce etc. have been rushing to ink partnerships with OpenAI – they understand integrating these models can hugely augment human capabilities.
The Opportunity is Now
Imagine the impact when assistants like ChatGPT, which can comprehend requests, analyze data/documents and provide recommendations start handling:
- Customer queries instead of call center staff
- Contract review rather than paralegals
- Structuring sales pitches allowing more time for relationship-building
As this represents just a tiny fraction of future applications, OpenAI finds itself ready to tap a total addressable market running into hundreds of billions long-term.
Reading the Tea Leaves: Deciphering Indicators Around OpenAI‘s IPO
Considering the recent hypergrowth in both capabilities and commercial interest, OpenAI must be evaluating the right timing for its public debut.
As per their latest announcement, the company even stated they‘re open to selling existing shares at their current private valuation of $29 billion. This signals preparations to offer liquidity for employees, board members and other insiders may be underway.
While the typical tech IPO process tends to stay opaque due to regulatory constraints, focusing on the metrics driving momentum yields clues:
- Hiring sprees in recent months, especially for senior finance and policy executives
- Onboarding advisors like lawyers and bankers experienced in IPO execution
- Statements indicating OpenAI usage grew 10x post ChatGPT launch
Reading between the lines by tracking developments like these helps ascertain IPO readiness.
And to me, the tea leaves suggest OpenAI has its eyes set on 2024 to transition towards a publicly traded company.
Investment Benchmarking: How Does OpenAI Stack Against Publicly Traded AI Peers?
OpenAI achieved unicorn status and a $29 billion valuation quicker than any startup in history. But how does it compare against publicly traded industry peers when considering:
a) Annualized Revenue Run-Rate
b) Revenue Growth %
c) Gross Margin %
Let‘s explore context-setting benchmarks.
AI Stock Comparison
| Company | Market Cap | Forward Revenue | YoY Revenue Growth % | Gross Margin % |
|---|---|---|---|---|
| OpenAI | $29 billion (private valuation) | Estimated $200 – $300 million | 1000% | – |
| C3.ai | $1.97 billion | $308 million | 38% | 74% |
| Alphabet | $1.19 trillion | $609 billion | 10% | 55% |
| Microsoft | $1.74 trillion | $212 billion | 15% | 65% |
| DataRobot | $344 million | $434 million | 51% | 75% |
Here we notice that despite unproven economics, OpenAI‘s valuation dwarfs listed peers many times over – suggesting markets are baking significant future expectations into current price.
And if we look at growth rates, OpenAI recently mentioned usage spiked 10x after launching chatbots like ChatGPT into the mainstream.
For context, DataRobot has been the fastest-growing AI stock with 50% revenue expansion annually. OpenAI‘s rise blows away these metrics.
Now revenue and margins remain hard to predict accurately given the nascent business model. But with multibillion-dollar TAM potential in conversational AI itself, forecasts suggest OpenAI could hit $200 – $300+ million for 2023.
So when contextualizing these projections against public comparables, OpenAI does indicate strong fundamentals meriting unicorn status today, with room for exponential growth ahead.
And in my opinion, if they time markets correctly, the impending OpenAI IPO parade has the makings of a blockbuster debut.
Final Thoughts: Tempering Expectations While Staying Bullish Long-Term
Despite my largely optimistic perspective on OpenAI’s prospects, remember that this remains a story still in its early chapters.
As thought leaders like Gary Marcus have noted, we need to thoughtfully consider risks like:
- Potential for bias in dataset curation processes
- Regulatory constraints around responsible AI applications
- Ability to keep innovating apace in an intensively competitive arena
And most imminently, unforeseen events can always emerge to dampen sentiment or alter assumed timelines.
However, given the immense TAM for generative AI across industries, we’re realistically just scratching the surface of applications.
For investors like you keeping an eye on this arena, the opportunity for outsized returns over a long-term orientation seems highly attractive.
So stay updated on developments with an open yet critical mindset. And if you decide the upside merits exposure, consider investing through conduits like Microsoft that enable benefiting from OpenAI’s coming-of-age well before the curtains rise on its long-awaited debut.
The future remains embryonic. But with OpenAI’s promising headstart at the forefront of AI’s next paradigm shift, fortunes stand to be created for those who pay heed.
