If you haven’t been living under a rock recently, then you’ve probably heard of ChatGPT. This AI tool shot to fame after its release in November 2022 – stunning users with its human-like writing capabilities.
Screenshots of articulate responses to users’ prompts quickly went viral on the internet. Poetry, essays, philosophical ponderings, and online dating bios – all spun up in a matter of seconds – are just some examples of these.
Now, many are wondering whether this is the next evolution of artificial intelligence and what it all means for the future.
They’re also wondering how they can invest in the company behind this revolutionary technology, OpenAI. In addition to ChatGPT, OpenAI has also brought us AI-generated art with DALL-E, so it’s no wonder they want to jump on the hype train.
With all this said, one burning question remains: can you invest in OpenAI stock?
Let’s find out…
Can You Invest in Open AI Stock? Is OpenAI a Public Company?
Unfortunately, Open AI is a private company, which means you can’t invest in Open AI stock at the moment. Average investors can only buy publicly traded companies listed on the stock market.
There are a few reasons why companies might choose to stay private:
- They don’t want to deal with the scrutiny and pressure from public shareholders
- They want to avoid the regulatory burden that comes with being a public company
- They already have enough funding from private investors like venture capital firms, so don’t need more money from an IPO
However, just because you can’t directly invest in Open AI stock right now, that doesn’t mean you can’t gain some indirect exposure.
For example, as you’ll see below, Open AI is closely linked with some other major listed companies. While not a perfect solution, investing in these stocks is about as close as you can get to the real thing.
Who Owns Open AI?
OpenAI is associated with lots of high profile names and companies, which causes a lot of confusion about who actually owns it.
So let’s put that to bed…
Does Elon Musk Own OpenAI?
For obvious reasons, many people believe that Elon Musk owns Open AI.
Firstly, he co-founded the company as a non-profit in 2015 along with CEO Sam Altman and some other partners.
Collectively, they pledged $1bn to the company in an effort to bring artificial general intelligence (AGI) to the masses in a fair, safe way. By openly sharing their research and technology for free, their hope was to democratize artificial intelligence and prevent it from falling in the hands of a small group of big tech giants.
In addition, Musk has been heavily involved in artificial intelligence research through his different companies. For example, Tesla uses AI technology for its advanced driver assistance systems.
However, while you’d be forgiven for thinking Musk owns Open AI, he actually left the company’s board in 2018, citing a potential conflict of interest as Tesla’s CEO. Now, his involvement is limited to being a donor.
Does Microsoft Own Open AI?
In 2019, the original non-profit parent company (OpenAI Inc.) established a for-profit subsidiary called OpenAI LP.
The reason was simple.
If OpenAI wanted to keep up with well-funded competitors like Google, then it had to attract some investment. This new structure allowed both outsiders and employees to do just that.
Shortly after, Microsoft announced a $1bn investment in the for-profit company, which made Microsoft Azure the exclusive cloud provider for OpenAI’s services. A year later, OpenAI entered an agreement to exclusively licence its GPT-3 language model to Microsoft.
The funding didn’t stop there though. Microsoft invested another $2bn in the company in 2021, and just a few weeks ago, announced another $10bn investment.
Under the terms of this latest investment, Microsoft will own 75% of OpenAI’s profits until they recover their original $10bn investment. Once that milestone is reached, Microsoft will drop their ownership share down to 49%, with another 49% owned by other private investors, and the remaining 2% owned by the non-profit parent company, OpenAI Inc.
As such, while Microsoft doesn’t technically own OpenAI, it certainly has a large degree of influence over the company.
How to Invest in Open AI Stock
Until Open AI goes public through an IPO, retail investors can’t buy any shares in the company. Unfortunately, you need to be an accredited investor if you want to invest in pre-IPO stocks.
However, all is not lost.
As mentioned, Microsoft will own the lion’s share of OpenAI’s profits for the foreseeable future. Does that mean you can get indirect exposure to OpenAI by investing in Microsoft shares?
Well, yes and no.
While it’s true that some of OpenAI’s profits will accrue to Microsoft, shareholders will barely notice it. When you’re dealing with a company as big as Microsoft, it takes a lot to move the needle.
For context, according to anonymous sources, OpenAI is expected to generate sales of $200m in 2023 and $1bn in 2024. Microsoft just made $53bn in sales for the last quarter of 2022 alone!
Having said this, there are obvious synergies between OpenAI and Microsoft’s broad suite of products. For instance, Microsoft already uses OpenAI’s technology for Github Copilot, Azure, Bing, and its Microsoft Office tools. Some analysts estimate that products accounting for almost three-quarters of Microsoft’s revenue could eventually benefit from OpenAI technology.
All in all, Microsoft is by no means a “pure-play” on OpenAI, however it is probably the best option to get some exposure. Just don’t be disappointed if the share price doesn’t reflect it for a while.
Other Ways to Invest in AI Stocks
While you can’t buy shares in OpenAI right now, there are plenty of other stocks spearheading the artificial intelligence revolution. And these are stocks you can buy.
Alphabet
Google’s parent company, Alphabet inc., is an obvious one. Alphabet has been utilizing AI for a long time now; in products that most of us use every day.
For example, Google uses it to optimize search results by only showing the most relevant websites for a given query. The same goes for video searches in YouTube.
It’s also integrated into Google Cloud with applications like TensorFlow – an open-end platform that lets developers build their own AI software.
Not to mention that Google’s DeepMind is one of the most advanced AI research labs in the world.
Interestingly, Google owns a stake in another exciting private company called SpaceX, which I explain further in a separate article titled SpaceX Stock Price Chart.
Nvidia
Nvidia helped pioneer the modern AI revolution with their graphics processing units (GPUs). These chips allow many computations to be carried out simultaneously, which is essential for building AI systems with machine learning capabilities.
You will find Nvidia’s GPUs in most high-tech computing architecture these days. Every datacenter in the world is packed with Nvidia chips, providing the foundation for deep learning programs like GPT-3. They even build AI chips for self driving cars. Not only that, but their burgeoning software portfolio is transforming the company into an end-to-end AI solutions business.
A word of caution, however.
If you’re going to buy any of these stocks for their AI technologies, remember you’re buying something far bigger than just the AI business. These companies have multiple revenue streams that can affect the share price, so make sure to do your research on the ENTIRE company before investing.
When is Open AI Going Public?
OpenAI haven’t announced any plans to go public, so there is no telling when, or even if, they will in the future.
Having said this, it wouldn’t come as a surprise if they did at some point. The amount of capital required to fund all the R&D behind such advanced AI tools is astronomical. At some point, they may have no choice but to go public.
Sam Altman, the CEO of OpenAI, said as much a few years back when he admitted the company will “need more capital than any non-profit has ever raised, probably”.
Until then, OpenAI will remain a privately owned company.
Open AI IPO Date
There are no plans for OpenAI to become a public company at this moment in time, which means there is no IPO date.
How to Buy OpenAI IPO
In order to buy OpenAI after it lists, you will have to open a brokerage account, search for its name, and select the amount of shares you wish to purchase.
OpenAI Valuation
OpenAI’s recent funding round with Microsoft values the company at about $29bn.
Before this, it was valued at $14bn after a tender offer in 2021, and $20bn later that same year following a secondary share sale.
In other words, OpenAI has doubled in value over the last 2 years.
OpenAI Stock Price
Unfortunately, because OpenAI isn’t publicly traded, it doesn’t have a live stock price. When/if it decides to go public, the stock price will be determined by its valuation at the time as well as the number of shares it issues.
However, it won’t be until it starts trading that we’ll see what the market actually thinks the stock price should be.
What is OpenAI Stock Symbol?
OpenAI doesn’t trade on the stock market, which means it doesn’t have a stock symbol/ticker yet.