ChatGPT maker OpenAI is reportedly exploring a private share sale that could value the company at $500 billion (€430 billion).
Is it worth it?
The bullish argument: ChatGPT already has 700 million weekly users. OpenAI is pushing into search, cloud, software and hardware. It could become the foundational platform for the AI era, like Windows was for the PC.
“This is an AI revolution, and OpenAI is the golden child,” says high-profile Wedbush analyst and AI enthusiast Dan Ives.
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If you are worried about valuations, says Ives, you’d have missed every technology rally in history.
The bearish argument: you can’t ignore valuation, and OpenAI’s has shot up from $300 billion to $500 billion, valuing it at about 25 times sales. That’s rich – very, very rich.
Perhaps, but frothy valuations often signal that enthusiasm, not fundamentals, is calling the tune.
Fund giant GMO notes the S&P 500 is up 27 per cent since sentiment flipped in early April, but more speculative corners have gone vertical.
A basket of loss-making tech stocks is up 57 per cent; AI stocks, 60 per cent; highly-shorted stocks, 68 per cent; meme stocks, 77 per cent; and bitcoin-sensitive names, 112 per cent.
Animal spirits are back, and momentum is driving prices more than profits.
In that context, OpenAI’s valuation isn’t a bizarre aberration. Rather, it’s a reflection of a wider market mood, with excitement trumping caution.
