OpenAI closes funding round at an $852B valuation
cnbc.com529 points by surprisetalk 5 days ago
529 points by surprisetalk 5 days ago
https://openai.com/index/accelerating-the-next-phase-ai
$2b/month which is $24b/year. Not as much as I expected considering they were at $20b by end of 2025.[0] They only added $4b since? Anthropic had $19b by end of February 2026 and they added $6b in February alone.[1] This means if they added another $6b in March, they're higher than OpenAI already. However, I heard that OpenAI and Anthropic report revenue in a different way. OpenAI takes 20% of revenue from Azure sales and reports revenue on that 20%. Anthropic reports all revenue, including AWS's share.[2] [0]https://www.reuters.com/business/openai-cfo-says-annualized-... [1]https://finance.yahoo.com/news/anthropic-arr-surges-19-billi... They aren't reporting anything yet. What we hearing is just from news media who get their leaks/info from investors who get some form of IR reports/ presentation. Both will do public reporting only when they IPO[4] and have regulatory requirement to do so every quarter.
For private companies[1] reporting to investors there are no fixed rules really[3] Even for public companies, there is fair amount of leeway on how GAAP[2]expects recognize revenue. The two ways you highlight is how you account for GMV- Gross Merchandise Value. The operating margin becomes very less so multiples on absolute revenue gets impacted when you consider GMV as revenue. For example if you consider GMV in revenue then AMZN only trades at ~3x ($2.25T/$~800B )to say MSFT($2.75T/$300B) and GOOG ($3.4T/$400B) who both trade at 9x their revenue. While roughly similar in maturity, size, growth potential and even large overlap of directly competing businesses, there is huge (3x / 9x) difference because AMZN's number includes with GMV in retail that GOOG and MSFT do not have in same size in theirs. --- [1] There are still a lot of rules reporting to IRS and other government entities, but that information we (and news media) get is from investors not leaks from government reporting - which would be typically be private and illegal to disclose to public. [2] And the Big 4 who sign off on the audit for companies prefer to account for it. [3] As long as it is not explicit fraud or cooking the books, i.e. they are transparent about their methods. [4] Strictly this would be covered in the prospectus(S-1) few weeks before going public and that is first real look we get into the details. Does the GAAP accounting matter if everyone passively buys shares due to the new fast entry rules, which corruptly will force us all to buy into these companies? The fundamentals and true value seem less relevant than ever: https://www.benzinga.com/markets/tech/26/03/51248353/michael... For other readers, I want to add some context here. NASDAQ is pondering whether or not to change their NASDAQ 100 index membership rules for IPOs. Currently, there is a three month waiting rule for IPOs. They are proposing (not sure if passed/agree/completed yet) to remove this waiting rule for IPOs. Real question: What is the real impact of this rule change? To me, it seems so minor. Three months is just a blip in time for any long term investor. Also, if you don't like the NASDAQ 100 rules, then you don't have to invest in securities that track it. You can trade the basket yourself minus the names that you don't like. Finally, I would say that S&P 500 index is far more important than NASDAQ 100. To join the S&P 500 index, the name must be profitable for the most recent year. (four quarters). Recall that Uber IPO'd in 2019, but was not profitable until 2023. OpenAI probably will not be profitable when it goes public; thus, it will not join the S&P 500 immediately. I think the bigger story is SpaceX. It will likely IPO very close to a 1T USD market cap (with a small float: ~10%). And, thanks to StarLink, I assume that SpaceX is now wildly profitable. The "corruption" allegation is that for, yes, SpaceX, index funds will effectively be "forced" to buy in right away at their IPO price, rather than seeing where they settle before getting the money in. Given that most people have most of their money in index funds, it's sort-of an automatic buy and raises some hackles about a fixed game. Saying "you can trade the basket yourself minus the names you don't like" is not a real counterargument. Most of us are not going to do that, I'm not going to do that and I'm writing this post right now. John Doe is certainly not doing that. ”Given that most people have most of their money in index funds” ”Most people” is doing a lot of heavy lifting there; 52% in the US and just 25-30% globally invest their money > Also, if you don't like the NASDAQ 100 rules, then you don't have to invest in securities that track it. Isn't the idea with the indexes that they allow you to intentionally not take an activist position in the market? The exposure is not tied to any underlying market hypothesis. In other words, if we make people form a market hypothesis in order to decide whether or not to hold this index, it has failed in its purpose. Diluting the index entry rules, only devalues the index utility. When it becomes a bigger problem, other indices with higher quality controls will out compete the current ones and be used by asset managers seeking safety. More likely than not, most of us are already holding stock in these companies one way or another. All the Mag 7 hold a major chunk of OAI and Anthropic stock anyway, slower entry does not make it less risky for us. Even if the big tech companies did not hold any stock, they are still the biggest vendors and their own order books is hugely impacted by the AI demand from these two ( and others in this space), either way we are all in this together. > When it becomes a bigger problem, other indices with higher quality controls will out compete the current ones and be used by asset managers seeking safety Doubt it. The world does not allow perfect competition. > world does not allow perfect competition What does this have to do with anything? Plenty of asset managers construct indices to save fees. lol imagine someone believing in the invisible hand of the free market in 2026 In the short term there are distortions and inefficiencies. It may feel like free market is done . However in the long term, economics usually finds the most efficient way. Maintaining inefficient structures like tariffs or monopolies becomes more and more expensive and eventually untenable and disruptions will occur. I personally find this is the correct solution, since indexes are over-inflated either way, this brings much needed sanity to the index. Your index is now worth much more or much less based on how you view the AI bubble and you are forced to understand and correct your forward looking investments accordingly. Passive investments are good, but if taken too far as they clearly have been in the last decade they become a scam. Everyone is SIPing into it, and there is infinite liquidity. Until one big whale finally decides they are booking it, then all hell will break loose on the same damn day. Yes gaap absolutely matters. You can just choose not to play the accounting game, and only choose the ones that actually gaap viable as investment opportunities. For example mag7 - tesla are all relatively cheap when they dip. Some times the best play is just not to play. If you think they are too risky, walk away. There are enough good oppotunities How much do these names need to "dip" for you to consider them cheap? There are a few things to consider if you are in the investment space: - Growth rate: you can't compare them to the average single digit growth companies or dividend focused companies. Most of these tech companies revenue are still growing at double digit with good moat. Pe is a good measure but it's not absolute. If you believe they sustain their growth then it's a good bet. And you can choose not to buy in their growth stories too. At the end of the day investment is about judgement call - History benchmark: some of their pe is at historical low. So they are actually cheaper than before. - Pe ttm and forward pe: how much pe ttm are they at? how much forward pe are they projecting? If forward pe is significantly lower, that means the current analysts consensus is that they will grow in future - Pe is the a number but it's not everything. You need to consider multiple things to decide if that's undervalued for you. It's highly subjective as different interpretations are common. - This post is about if you want to play the gaap game with private tech companies. My point is that there are still many public companies that are cheap at certain point. You just need to be patient and be willing to research and wait. For example, meta at around 500 was a buy for me, but since then it has rebounded it's still good but not as undervalued as a few days ago what would force you? I guess if you are a greedy bastard you might feel that way... The $19b ARR and $6b added in Feb came directly from Anthropic CEO recently. Until they’re using consistent methods of reporting those figures, they’re not comparable. Same as any other company pre vs post IPO Was referring to this: > The $24b figure is literally in OpenAI's announcement. And? That's not a legislated report; they can use whatever mechanism they want to, without disclosure, to produce numbers. Lets wait until they are regulated as a public company, then their mechanism has to be both aligned with what legislation requires as well as clearly documented in their report. > they can use whatever mechanism they want to, without disclosure, to produce numbers. That would be fraud against whoever participated in this round, so no. Just because they aren't regulated doesn't mean they are literally free to do whatever they want to close the round. > Just because they aren't regulated doesn't mean they are literally free to do whatever they want to close the round. What makes you think their public announcements are aligned with what they give prospective investors? The fact that in all the rounds I have been involved in all public announcements related to the round go through the legal team to check for possible material misstatements that could cause exactly this kind of problem. > The fact that in all the rounds I have been involved in all public announcements related to the round go through the legal team All public announcements go through the legal team, regardless of whether it's related to the round or not. it would be fraud only if they're also telling their investors the same numbers. True. That's reporting and they are also reporting numbers internally, which are getting leaked. I am reminded of the "I declare bankruptcy" meme from the 2000's TV series Office. When we say reporting it means there are statutory submissions with an auditor signing off, with legal liability. As the other reply referenced consequences for doing this incorrectly can be severe - Arthur Anderson is no more after all because of Enron. A Press Release (of a private entity) does not have to satisfy this high bar. Press release does mean no constraints, for public companies, disclosure of important information by officers and other insiders have strong controls. Even if its the just a rocket/poop emoji on a casual social media platform. Lawyers have to refile with the SEC in the expected format. Even private companies have restrictions on not claiming things fraudulently to investors, but these are accredited investors with lesser controls than retail. 30x revenues at 17% revenue growth is... aggressive. Except it's not 100x revenues, and it's not 17% growth. I don't know where you got those numbers from? The numbers OpenAI gave in the post would mean a 30x multiple pre-money. And the $20B -> $24B run-rate growth since the start of the year could plausibly mean anything from 110% to 200% annualized growth rate, depending on whether that happened over two or three months. The $24B is a lower bound as well, since they only gave use one significant digit for the monthly revenue. You're right, I was thinking about 100x revenues and forgot to confirm the math. Updated to reflect your point. ChatGPT itself provided the 17% number (it's most recently available growth rate)... > 17% revenue growth I think ads is going to massively change this number. And that is revenue only. In the past 15 or so years most US companies (and especially startups) always talk about revenue only. Wheras only profit should matter. E.g. what good is 20 billion per year when "OpenAI is targeting roughly $600 billion in total compute spending through 2030". That is $150 billion per year? The startup game is about building assets and then cashing out on them during exit. Assets are harder to measure. Facebook used to say something silly like every user was worth $100. That sounded ridiculous for a completely free app but over a decade later, the company is worth more than that. Revenue is an easier way of measuring assets than profit. Profit doesn't really matter. It gets taxed. But it's not about dodging taxes; it's because sitting on a pile of money is inefficient. They can hire people. They can buy hardware. They can give discounts to users with high CLTV. They can acquire instead of building. It's healthy to have profit close to $0, if not slightly negative. If revenues fall or costs increase, they can make up for the difference by just firing people or cutting unprofitable projects. Also when they're raising money, it makes absolutely no sense to be profitable. If they were profitable, why would they raise money? Just use the profits. > Wheras only profit should matter Profit is money you couldn’t figure out how to spend. During growth, you want positive operating margins with nominal profits. When the company/market matures, you want pure profits because shareholders like money. If you can find a way to invest those profits in new areas of growth, that’s better. A lot of investments gets amortized over many years so even if you're investing all your free cash you'll still show a lot of profit. > Profit is money you couldn’t figure out how to spend. Profit is the money showing your business is sustainable. Ever since the ZIRP era US companies keep haemorrhaging money at a rate that is physically impossible to recoup. If OpenAI plans to lose 100+ billion dollars per year for half a decade, what profits are you talking about to offset the losses? > When the company/market matures, you want pure profits because shareholders like money. Ah yes. Shareholders like money. And not, you know, basic accounting like "we need money to actually pay salaries, pay for equipment and offices etc. without perpetually relying on seeming endless investor money". > what profits are you talking about to offset the losses? You don’t need profit to offset the losses. You can simply reduce spending / expenses. In principle yes, but all metrics so far suggest they are losing money every user interaction. There is very little network effect with these tools so It's not like they can start cutting back on staff and feature deployment. lol that’s a line so incredibly naive it hurts. One does not “simply” reduce spending. > One does not “simply” reduce spending. Why does stock price go up after mass layoffs? What happens when the only way to reduce spending is to reduce your assets? Seems like circular logic at that point. I suppose the market isn’t expected to be rational all the time, but eventually it is. By your logic any company should just layoff everyone and profit on the stock price going to the infinity. Company would no longer function of course but why it would matters if the stock price is through the Moon? > Profit is the money showing your business is sustainable. Notice I said you should have nominal profits. > Ah yes. Shareholders like money. And not, you know, basic accounting like "we need money to actually pay salaries, pay for equipment and offices etc. without perpetually relying on seeming endless investor money". All of these are costs that reduce your profits. A maximally profitable business fires all employees except shareholders, closes every office, stops all RnD, and leases IP or real estate to others on long-term deals that never need to be renegotiated. Not sure why you’re downvoted. Everyone wants to treat OpenAI like a car wash business where they need to make a profit almost immediately. I don’t know why people can’t understand that the industry is in a rapid growth stage and investing the money is more important than making a profit now. The profits will come later. > The profits will come later. The nearly $1T hand wave. Forgive me if I ask how. Might give it some credence if Anthropic and Google weren't pulling even with or surpassing them in various way or markets. Whats worse is they mostly seem to have retail market name recognition which is arguably the hardest, or maybe the impossible market to make money from. Apple is another one that focuses almost exclusively on retail and is also one of the most profitable in history. > profits will come later Holy crap, is it the year 2000 again? 2000s, 2010s, and 2020s. This is how tech companies work, especially in a new industry. It's not as much as you think. Google is spending $185b on data centers this year alone. Amazon is spending $200b this year. Total capex for big tech is ~$700b in 2026 and we're not including neo clouds, Chinese clouds, and other sovereign data centers. Since everyone is trying to get compute from anywhere they can, including OpenAI going to Google, it's hard to tell what is used internally vs externally. For example, it's entirely possible that Google's internal roadmap for Gemini sees it using $600b of compute through 2030 as well. In that case, OpenAI needs to match since compute is revenue. But if Gemini doesn't end up using the compute because of whatever reason, Google has other ways to monetize that compute. OpenAI doesn't? So the same money spent by OpenAI and Google doesn't carry nearly the same amount of risk? And who would be buying this from them? Let's say you're anthropic, would you give money to your competitor? I'll also add that Google is already a player in that space so more likely to easily sell it off. this isn't credible though. them not being able to use all their compute likely means that the ai bubble has popped, so they won't be getting a good price on it. Give me a billion and I'll have 500M of revenue in no time by selling dollars at 50 cents. Why are we treating OpenAI and Anthropic differently than say, Amazon or Uber? Both companies invested in growth for many years before making a profit. Most tech companies in the last 2-3 decades lost money for years before making a profit. Why are we saying that OpenAI and Anthropic can't do the same? Two reasons. They somewhat broke even, and kept getting investment. The potential for quasi monopoly was obvious. Openai can't claim either. How did Uber somewhat break even? They lost $34b before making a profit. Uber was only on a path to monopoly in the US, not world wide. It’s lost to local competitors in most countries. And it can get disrupted by self driving cars soon. OpenAI’s SOTA LLM training smells like a natural monopoly or duopoly to me. The cost to train the smartest models keep increasing. Most competitors will bow out as they do not have the revenue to keep competing. You can already see this with a few labs looking for a niche instead of competing head on with Anthropic and OpenAI. The cost of copying SOTA models though is super cheap and doesn’t take super long. How do you distill when OpenAI and Anthropic inevitably move to tasks running in the cloud? IE. Go buy this extremely hard to get concert ticket for me. Distilling might only be effective in the chat bot dominant era. We are about to move to an agents era. Furthermore, I’m guessing distilling will get harder and harder. Claude Code leak shows some primitive anti distilling methods already. There’s research showing that models know when it’s being benchmarked. Who’s to say Anthropic and OpenAI aren’t able to detect when their models are being distilled? even ignoring distillation, so long as hardware or ml get better over time, training a new model from scratch is cheaper the later you do it
aurareturn - 5 days ago
manquer - 5 days ago
SilverElfin - 5 days ago
throwaway2037 - 5 days ago
Why is this "corrupt"? That term makes no sense here. > which corruptly will force us all to buy into these companies
nixon_why69 - 4 days ago
cluckindan - 3 days ago
Fripplebubby - 5 days ago
manquer - 5 days ago
chronc6393 - 5 days ago
JumpCrisscross - 4 days ago
ml-anon - 5 days ago
manquer - 5 days ago
minraws - 5 days ago
gloryjulio - 5 days ago
throwaway2037 - 5 days ago
I asked ChatGPT for a list of Magnificent 7 stocks and their most recent price to earnings (PE) ratios. > mag7 (minus) tesla are all relatively cheap when they dip
In the last 50 years, I think the median PE ratio for S&P 500 index is about 15. Seven and below is considered rock bottom, and 30 and above is very high. These PE ratios look pretty damn high to me. Company Ticker P/E Ratio
Apple Inc. AAPL ~33
Microsoft Corporation MSFT ~25
Alphabet Inc. GOOGL ~29
Amazon.com Inc. AMZN ~30
NVIDIA Corporation NVDA ~38
Meta Platforms Inc. META ~28
Tesla Inc. TSLA ~378
gloryjulio - 4 days ago
master-lincoln - 5 days ago
aurareturn - 5 days ago
The $24b figure is literally in OpenAI's announcement. They aren't reporting anything yet. What we hearing is just from news media who get their leaks/info from investors who get some form of IR reports/ presentation.
diatone - 5 days ago
aurareturn - 5 days ago
What we hearing is just from news media who get their leaks/info from investors who get some form of IR reports/ presentation.
lelanthran - 5 days ago
seanhunter - 4 days ago
lelanthran - 4 days ago
seanhunter - 4 days ago
lelanthran - 4 days ago
adgjlsfhk1 - 4 days ago
robonot - 4 days ago
manquer - 5 days ago
maerF0x0 - 5 days ago
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maerF0x0 - 5 days ago
YetAnotherNick - 4 days ago
troupo - 5 days ago
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Swizec - 5 days ago
badpun - 4 days ago
troupo - 5 days ago
chronc6393 - 5 days ago
CraigRood - 5 days ago
LaGrange - 5 days ago
chronc6393 - 5 days ago
bumby - 5 days ago
justsomehnguy - 4 days ago
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aurareturn - 5 days ago
nutjob2 - 4 days ago
aurareturn - 4 days ago
That doesn't seem to be the case at all. Meta and Google are two of the most profitable companies in history, off the backs of free users. Whats worse is they mostly seem to have retail market name recognition which is arguably the hardest, or maybe the impossible market to make money from.
FatherOfCurses - 4 days ago
aurareturn - 3 days ago
aurareturn - 5 days ago
hvb2 - 5 days ago
aurareturn - 5 days ago
Why not? They've openly said they could in theory sell compute to others if they can't use it all. OpenAI doesn't?
hvb2 - 4 days ago
adgjlsfhk1 - 4 days ago
pier25 - 5 days ago
aurareturn - 5 days ago
hirako2000 - 5 days ago
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vlovich123 - 5 days ago
aurareturn - 5 days ago
adgjlsfhk1 - 4 days ago