OpenAI secures $500 bn valuation, overtakes SpaceX in market worth

The milestone puts OpenAI ahead of SpaceX in terms of market valuation as investor appetite for AI soars. The deal also offers liquidity to staff and boosts retention

OpenAI, the developer of ChatGPT, has reached a valuation of $500 billion after current and former employees sold around $6.6 billion worth of shares to investors, Reuters reported on Thursday.

 

The sale involved leading investors including Thrive Capital, SoftBank Group Corp, Dragoneer Investment Group, Abu Dhabi’s MGX, and T Rowe Price, according to Bloomberg. This secondary share sale pushed the US company’s valuation well above its previous $300 billion mark during a SoftBank-led financing round earlier this year.

 

The latest deal propels OpenAI beyond SpaceX’s $400 billion valuation. The milestone comes at a crucial moment for Sam Altman’s company as it negotiates with Microsoft to transition into a more traditional for-profit entity.

 

 

OpenAI, Microsoft in talks to reset structure

 

OpenAI and Microsoft are working to revise the terms of their partnership. The changes could enable OpenAI to seek a future public listing while ensuring Microsoft continues to have access to its cutting-edge artificial intelligence (AI) technology. The discussions reportedly include provisions to allocate at least $100 billion in equity to OpenAI’s non-profit arm, a step that would preserve its original mission while opening the door for more conventional capital-raising avenues.

 

Investment frenzy in AI infrastructure

 

The rapid valuation surge reflects intensifying investor appetite for AI firms with the potential to transform industries and global economies. Sam Altman’s OpenAI joins other major players such as Nvidia Corp, which are driving a worldwide effort to expand data centres and AI services—an endeavour projected to cost trillions of dollars. Although OpenAI has yet to report a profit, it has struck large-scale deals with Oracle Corp and SK Hynix Inc, further fuelling an infrastructure boom.

 

Competitive talent market

 

The soaring valuation comes amid a fiercely competitive AI talent market. Big tech firms are vying for skilled researchers, with Meta Platforms reportedly offering nine-figure pay packages to lure talent from OpenAI and other leading labs for its 'superintelligence' team.

 

A secondary sale is expected to help OpenAI retain its workforce by giving employees liquidity and incentivising them to stay rather than accept lucrative offers elsewhere. Such employee share sales are common among major US startups as a retention strategy and a means to attract investors.

 

Despite allowing up to $10 billion worth of shares for sale, the total amount of units sold fell short of that figure—an indication that many employees remain confident in OpenAI’s long-term prospects, according to Bloomberg.

 

OpenAI taps South Korea's Samsung, SK Hynix

 

In a separate development, Samsung Electronics and SK Hynix Inc signed letters of intent to supply chips to OpenAI’s Stargate project. OpenAI will also collaborate with the two South Korean firms to build two data centres, including a Korean-style Stargate, supporting Seoul’s ambition to become a leading AI hub in Asia.

 

South Korea currently has the second-largest number of paying ChatGPT subscribers after the US. The announcement followed a meeting on Wednesday between OpenAI CEO Sam Altman, South Korean President Lee Jae Myung, and the chairmen of Samsung Electronics and SK Hynix at the presidential office in Seoul.

 

The Stargate project, unveiled by US President Donald Trump in January, tasks OpenAI and partners such as SoftBank Group Corp. and Oracle Corp. with maintaining US leadership in artificial intelligence.

 

Growing rivalry in AI space

 

OpenAI faces intense competition from tech giants including Google and Anthropic, the latter also in the midst of major capital-raising efforts. Despite the challenges, the recent funding success underlines the confidence of investors in OpenAI’s pivotal role in shaping the future of AI technologies.