OpenAI files confidentially for IPO, following Anthropic

ChatGPT-maker OpenAI has confidentially filed for an initial public offering (IPO), following a similar move by its main rival, Anthropic. This development escalates the race between the two leading AI firms as they navigate the path to public markets.

OpenAI submitted a draft registration statement to the U.S. Securities and Exchange Commission (SEC) for a proposed IPO. The company, last valued at $852 billion, indicated that while the timing is uncertain, the confidential filing provides the option to go public sooner if beneficial. This comes amidst a regulatory environment where the SEC has adopted a more hands-off approach under the current administration.

Despite its ambitions to go public, OpenAI has reportedly missed its own targets for new users and revenue. The company’s chief financial officer has raised concerns about the sustainability of its massive data center spending. OpenAI projects to burn $85 billion in 2028, even with doubled sales, suggesting it may not generate more cash than it spends for at least four more years.

In contrast, Anthropic has presented a more optimistic financial outlook, nearing its first quarterly profit. However, with recent substantial funding rounds and potential debt for chip allocation, Anthropic also faces significant spending. The race to IPO is crucial, as experts believe the first to market will secure a larger share of increasingly scarce capital for AI companies.

OpenAI’s confidential filing allows it to prepare for a public offering without immediately disclosing detailed financial information. While specific pricing has not been revealed, secondary markets offer insights, with Anthropic recently surpassing OpenAI in valuation on platforms like Forge Global. This competitive dynamic suggests that the public markets are viewing both companies as "dual winners" in the broader large language model race.

However, Anthropic's valuation will likely influence OpenAI's pricing. A conservative valuation from Anthropic could complicate OpenAI's path to its target valuation, especially given PitchBook’s assessment that OpenAI may be overvalued relative to its fundamentals.