OpenAI raises $11B at a $1.25T valuation
247wallst.com
247wallst.com
This will also make it even harder to avoid any future IPO being a down round. They’re almost certainly worth much less than Anthropic and Anthropic is, per reports, struggling to keep its valuation much above 1T, and even that may fall through.
Unless things change considerably, this is less than a 6 month runway.
It's not common for raises to give you this little runway.
You could read into it that they expect to IPO in far less than that amount of time, and this is a short bridge until then.
Interest rates are the big wildcard. If this is the start of a significant rising cycle, akin to 2022/2023, then the AI bubble is toast and all these companies are dead. If the Fed pauses in December/January there may be a window of opportunity in early 2027 and we'll see both OpenAI and Anthropic IPO and possibly jump.
Rising interest rates are a triple whammy to AI companies: 1) risk capital always flees first when rates go up, so the available capital dries up 2) they and their suppliers have borrowed significantly to fund datacenter expansion, so rising rates will directly increase their expenses and 3) AI is considered an investment for their customers, and corporate finance always pulls back on more speculative investments when rates go up, and so their customers will likely pull back and directly shrink their revenue.
Whether they IPO depends on a lot of factors. For example, if we see a market meltdown triggered by data center moratoriums, then neither lab will IPO in 2027 at the very least. And if Anthropic achieves RSI first, there won't be much investor interest in a clearly inferior lab.
But none of these numbers are real. Softbank and MGX are re-arranging the deck chairs between OpenAI and Stargate so the actual new outside money here indicates very weak demand.
This is a press release to try to anchor the valuation but it doesn't seem like a lot of people are buying that.
What makes you say this?
All the other products feels like a (desperate?) attempt to create moat and friction for switching models.
If AMD and Nvidia could make the exact same thing the exact same rates, why would the stock price of one be higher than the other?
And in terms of capabilities and pricing they are not *that* different.
So I can't imagine one company being vastly more valuable than the other one (unless their spending or long term strategy is vastly different).
But Anthropic might not actually be worth more that much more than OpenAI: https://news.ycombinator.com/item?id=50394906
Developer sentiment is irrelevant in the eyes of the normies
Less sarcastically though the bet on how much AI company IPO at attracts a certain type of people. People who may have a certain believe about AI companies which will bias their assumptions quite a bit.
OpenAI will be just fine, they are building superintelligence. I think these comments will be pretty funny in a few years. This is the best wealth building opportunity of my generation.
This has nothing to to with the recent EO, it has been known for some time that the labs are racing towards ASI.
Because this is not a topic you're familiar with, I would recommend some light reading on it before returning to the topic and commenting on it with such confidence.
A good starting point would be reading some of the perspectives of some of the people that built the modern LLM. I promise you they understand the technology and its potential better than you, and were discussing these things well before it was even a concept in your mind.
Edit: sneaky edit bud. The term existing for a while doesn’t make the uptick in use of said term since the EO, right before trillion+ IPOs, to describe what the frontier labs are building, less of a “funny” coincidence. The people you tell me I should listen to standing to make big bucks on me believing them makes it, at the very least, ever so slightly suspicious.
There are no serious people left who believe this anymore
>>Less sarcastically though the bet on how much AI company IPO at attracts a certain type of people. People who may have a certain believe about AI companies which will bias their assumptions quite a bit.
Yeah but there is also someone on the other side.
But this number isn't a matter of market volume, is it?
It's a matter of what analysts, regulators, banks, and investors choose.
And they appear to not be that keen on a valuation that high, judging by the press.
In quite a lot of sectors, gambling on a prediction market for an outcome you can influence is frowned upon, unethical, even illegal.
To be clear, I am talking about the investment analysts who have a role in setting the IPO price, which is a (then-private) decision, not an outcome of a market. It would almost certainly be a crime for the analysts involved in pricing an IPO to make prediction market bets.
Polymarket has it at ~50% that their IPO value is between 1.25T and 1.5T. Do you think that is representative of reality? It's not like we get to flip the IPO coin ten times.
Sure, the price is the weighted average of expectations. People take either side for many reasons though. There would still be a lot of training in a perfectly efficient market because people and institutions have their own utility of money functions and other reasons to take bets (hedging their vesting stock for example).
>>. I'd look at a prediction and say "well obviously the favored side is going to win" and put all my money there, over and over again, until I was the richest mortal in the universe.
>>Polymarket has it at ~50% that their IPO value is between 1.25T and 1.5T. Do you think that is representative of reality? It's not like we get to flip the IPO coin ten times.
Yeah, it's the best guess we have.
>> It's not like we get to flip the IPO coin ten times.
That's very limited frequentist perspective. Just because you can't re-run the experiment doesn't mean you can't assign probabilities to events.
One time events have no probability, they happened exactly as they happened and no outer outcome can be assigned probability besides 0
Anthropic is way more focused. That helps in a way that builds upon another: their product tends to be better and the people's perception of it as well.
But "much less"? OpenAI needs a month or two of good choices, progress & announcements, and that flips. On the other hand, Deepseek could blow both out of the water unexpectedly, ending the argument about who has the superior tech.
There's also the Elon factor. Anthropic has a good relationship with Elon (to the point where he discounted the compute sold to them by quite a lot) while OpenAI/Sama is the devil to him.
How could anything be bigger than Super Intelligence? Which is supposed to be the next step after AGI, which we presumably already have?
I'm tired boss...
Meh. We both do and don't have AGI, because everyone before ChatGPT thought it was obvious what it meant and it turned out we all disagreed with each other about that obvious meaning. We can't even all agree about the "artificial" part, which is the most surprising part to me, let alone "general" or "intelligence".
I think arguments for either direction are valid. On one hand, MCPs are essentially APIs used by developers. Developers will demand some form of open reusable standard, "MCP gateways" or hosts will spring up to host them, hyperscaleres will offer them, and ultimately it will be another cloud commodity.
On the other hand, some of the target users of MCPs is the consumer market rather than the developer market. An App Store model makes sense there and the provider/platform can collect the lucrative 30% cut and end consumers’ numbers makes for massive revenue opportunity. This dictates a walled garden "Agent" like Muse or Instant.
If #1 is the direction the market goes in, then more batteries-included solutions like Muse or Hermes become the next obvious step up the chain. If #2 wins, then yes having your MCP available to on a Muse App Store that Meta takes a cut of some sort would be larger.
But they are still not likely to be investment-grade at IPO.
Their recent "intelligent ui" (forget what they call it), which turns the chat almost into a magazine is amazing for people when they start doing measuring or responses comeback as little graphs or diagrams showing this or that.
Claude is still not able to generate pixel images.
I agree Claude is better for the likes of you and I, but I see the opposite in non-technical people which is most people
Also Google will eat them eventually in mass market part as well.
Devs and the token-consuming services they create are probably a more valuable market than the entirety of the glorified search engine use cases that the average consumer is focused on
Noone will sell them tokens, they will be shepherded into buying stuff (like now with ads, just better).
The alternative are fewer but a lot more high value contracts.
I wonder what came of the Jony Ive acquisition that was supposed to yield a physical product
This is tantamount to saying that the value proposition is unknown, if a supposed trillion dollar company could get upended overnight by a startup
Where's the moat, the unassailable first mover advantage, the enterprise lock intengrations that mean nobody could realistically move you out of the way even if they had slightly better tech ? If none of these exist, investors should be scared.
The Elon association could be a long-term negative.
It certainly didn't help the Republicans in this last election even with Elon donating half a billion dollars to them (post 2024 Elon appears to be, like AIPAC, more of a toxic association than any amount of money gained can overcome), and there are reasons to believe that flip on the political side will eventually matter on the business side of things.
Elon's Texas "home base" just flipped blue in a big way and there are likely to be high profile investigations into whatever it was he was doing with DOGE.
And perhaps most directly important to Anthropic, unless the winds change significantly in terms of the politics surrounding data centers (and I suspect if anything they will get increasingly hostile, not better), I wouldn't be surprised to see the Memphis city council get purged of pro-Colossus members, replaced by anti-data-center candidates when the next elections take place in Oct 2027.
Does anyone see the path to ROI here? There is clearly a profitable business model within these big AI labs, but it’s held captive by messianic 90-page IPO risk statements. I know they want to sell restricted access to the more capable models but the market for those kind of professional services doesn’t even exist yet.
Replacing all work where someone sits exclusivly behind a screen.
They’re raising at $1T, which makes them one of the planet’s largest companies and they’ve only been around for a short time, comparatively.
Yes, there was noise about possibly higher valuations still, but the [edit: private] market definitely thinks there is a $1T business model here.
At the end of the day that’s all that matters
Of course I have no idea what the technical results would have been if I had just used Opus 5.5 end-to-end, but I'm fairly confident it would have been more expensive given the rates my company pays for each. For that matter I wonder how Kimi3.1 Pro or DeepSeek 4.1 Flash 1017 would have done with various parts of the job. In fact I may try rerunning the whole thing using open weight models next week just out of curiosity.
If Kimi+DeepSeek produce something roughly equivalent, then just from my own personal experience with a novel problem involving legacy in-house code, as opposed to public benchmarks for which I don't have a great handle on how well they correlate with value produced by the models, that will make me question the valuation of both OpenAI and Anthropic.
Then check w/ Opus and Astra for good measure if it really matters. Works well. DSv4.1 is okay but does make mistakes. I run my 2x DGX sparks at 60-70% capacity this way, which nets about $400/mo worth of tokens on $30 of electricity.
I am hoping in the next six months to be able to in-house ALL of the above using a slightly more competent model, or two more sparks. It is slow running local, but it is really fascinating to have all this work done from my desk.
On 31st Oct, the FT was reporting they’d already cut the funding target from $30bn to $20bn and it looks like the couldn’t get close to that even
https://www.ft.com/content/7a3ad950-1b3b-4d9e-8c15-65a61ae61...
Going for the IPO collapses a large space of options that are available to the business. The AI business is entirely about data. Anthropic's IPO would generate an incredible amount of data that could be used by its competitors to refine their strategy. Knowing where to allocate capital is perhaps worth more than the capital itself at these scales.
What OpenAI will do if market sentiment around AI really falls apart I’m not sure
Class A stock gets paid out first, so "valuation" here is not what a retail investor would necessarily pay for class C.
Basically, do these people think that they'll get their $11B back? If so, they are ok with a high "valuation" because there is little risk. And with OpenAI's corporate structure, who knows what is actually happening.
https://www.bloomberg.com/news/articles/2026-10-05/openai-in...
More investigations need to happen.
I guess if there's even a 1% chance that sama is right and money will have no value in the future (or that no company besides AI companies will have value), it's worth getting a stake in OpenAi etc at any price, especially if you have more cash than you can possibly use otherwise.
But then again 1T today is 700b back in 2018. It's like 6 figures salaries, they don't hit like they used to.
2018 when Apple was first across the threshold, it’s P/E was around 20. Currently near 40.
Then inflation has cut the dollar in half in a bunch of categories. So that would put it at $4T with no growth at all.
Another way to look at it would be to think of this openAI news as announcing they have a $250B valuation if you’re fixated on pre-covid prices like I am. :)
I’m only half joking.
Regardless of what officials say, the only way out of the looming debt crisis in developed nations is to turn on the money printers and inflate the debt away. That's literally the only way out.
Next look at how concentrated inflation gains become in financial assets. Corporate valuations are the first thing to inflate (wages last, and at a much lower rate especially as you move down the income ladder).
Finally recognize that the concentration of wealth in the stock market has made the market itself too big to fail, meaning central bank intervention whenever things get too gruesome. Enter moral hazard at the government backstopped casino.
All of this leads to one conclusion: put all of your money in the stock market. Literally just buy the S&P, ideally a 2x levered S&P index ETF given historical studies of optimal leverage, and just let it ride...
If you slice it with supports and print it on a good machine, it will most likely turn out usable.
CNC mills are a different beast. If you ask your LLM of choice for some random gcode and run that, you deserve whatever happens.
Many softwares trip up on many things there, so did chatgtp up until maybe a year ago, now it can actually do image to step file where classic sw fails, I thought I'll never see the day but here we are
With opus 5.5, it's quite good. Normally I just prompt that it will be 3d printed and it avoids floating objects, from time to time I see on the slicer that there are and it checks all geometry and fixes it.
Most of the issues come from bad measurements or interactions with real world objects (margin for impurities, improving ergonomy, etc.).
For easy changes I could be faster if I knew how to fix the STL file directly. For more complex designs, I think opus is faster. I would say that knowing what you actually need to create and the limitations and characteristics of 3d printing is more important than knowing how to handle the 3d design tool.
There are several historical precedents of these three factors (capital intensity, low margins, high competition): Airlines in the 70s-80s, fiber in the 90's, railroads late 19th century, steel production post WWII, and more.
Apple ($4.98T), NVIDIA ($4.51T), Microsoft ($3.94T), Alphabet ($3.49T), Amazon ($2.80T), TSMC ($1.95T), SpaceX ($1.82T), Saudi Aramco ($1.69T), Meta ($1.56T), Tesla ($1.42T), Broadcom ($1.40T), Berkshire Hathaway ($1.22T), Eli Lilly ($1.21T), (Walmart ($0.996T))
16 companies with a market cap as big as the entire US GDP.
Make is make sense when 15 out of those 16 are US companies.
Back in, say, 2006, twenty years ago, there weren't 15 companies adding up to the entirety of the US GDP.
Something simply doesn't add up.
Market cap and GDP are both measured in currency units, I guess they have that in common, not sure I understand the usefulness of this comparison.
They do not care about you.
Their dreams and promises are from the bubble they live in.
Do not worship these men or these companies.
That said, China's own party-favoured economists have been warning about domestic AI investment being overheated since these Chinese AI companies haven't been shown to make much money yet to justify it.
I think Anthropic is worth far less... but it's looking like they may attempt to raise at a valuation betwen 1.1 and 1.2tn.
Now we have a trillion dollar startup, still raising money, implying that the status quo isn’t remotely their final form.
I understand AI is actually, no-bullshit, changing the world forever, including the global economy. That said, how much of this order of magnitude jump since “unicorn” got coined can be directly attributed to USD inflation?
If they didn't exist then you wouldn't need to coin a term to describe them. In reality in the mid 2010s when "unicorn" started being used there were already hundreds of them.
"Inflation" is probably not quite the right term, or maybe it implies too broad or too narrow of a phenomenon.
I think we're experiencing the result of decades of taxes being too low on the rich, so there's too much money chasing too little actual real productivity growth. The Buffett indicator keeps ticking higher and higher, because the rich have too much money. It's gotta go somewhere, so everything is turning into tulips.
Similarly in 2018: https://news.ycombinator.com/item?id=17613442
I wonder if that chap who said he’d put everything in FB at $14 put any at $18 because boy is he going to be wealthy today haha! The numbers all go up beyond what can you believe and were we in a bubble? Apparently we continue to be.
In any case, buying QQQ, while not exactly broadly diversified, still more diversified/less risky than just FB, would have yielded nearly the same return since FB's IPO.
https://www.wheresyoured.at/running-dry/
They got a bit of pocket change at this insane valuation.
"Give me some quick soundbites for my meeting with the press."
https://news.ycombinator.com/item?id=49117798
> I bet they’ll announce new fundraising soon. Someone gave them a top up to try and corner the market.
https://news.ycombinator.com/item?id=50012065
> > As OpenAI bides its time, the company is engaging in early stage discussions with investors about a potential new funding round. The company could raise around $30 billion, CNBC previously reported, but that figure could change.
> I predicted last month when they launched Luna that they had raised more funding and I suspect this tidbit dropped to CNBC is just prepping the public for a fundraising that’s already happened. There will probably be an announcement this month.
Why is it always SoftBank?
Wikipedia article on who suffers the most when speculative bubbles pop:
It's not like mag7 are going away if the bubble does pop. They might even benefit.
It's become a huge community of people who have their life savings in Elon, and endlessly circle jerk the hype.
But this goes along with Elons same promises for X; "X will support free speech" etc even though it's trivial to get banned for the most pointless things.
When will HNers realize that this is a fever dream? This is an edgy teenager's interpretation of "good".
The second someone uses a frontier model to attack other entities or hurt innocent people it will get (rightfully) shut down by the government.
We already saw this with the Fable export controls (and no one had even used these models offensively).
Open models will reach the same fate once the gov't realizes they are good enough. They will just ban weight hosting, require safeguards for any model routers that accept US payment, and embargo anyone that doesn't do these things.
There is a reason we don't let everyone in the world own RPGs.
1. The censoring goes much further than refuting to participate in a felony.
2. The censoring is done by private companies outside the democratic process.
3. Censoring requires a single source of truth. Somone who has then the power to decide what is true. Also most people will blindlessly beliefe everything an LLM says.
And people thought swatting was bad! Just imagine that jfc
also the valuation is not only on grok/cursor? also spacex (starling, currently cheapest deliver to orbit; future "data center in space")
actually for an ai company i think they are quite well diversified and have multiple things going on for them; are they worth $1T --> i don't know, but i see a way to them doing really good (will they? on average, probably not, but at least it imaginable)
What's its USP? Data centers in space that governments can't shut down without triggering Kessler syndrome?
Demand for AI is real and increasing. There is real shortage of compute right now. It might be that AI lab is not a sustainable business but I don't see how all that demand evaporates. If anything it will only increase as AI becomes good at more and more tasks.