OpenAI is in talks about a share sale that could value the company at $500 billion. Reuters confirms, “OpenAI, the creator of ChatGPT, is in early stage discussions regarding a secondary stock sale potentially valuing the startup at around $500 billion” https://www.reuters.com/business/openai-eyes-500-billion-valuation-potential-employee-share-sale-source-says-2025-08-06/. This figure reflects massive hype, not profits, since OpenAI still limits investor returns under its capped profit model.
“OpenAI was founded as a non‑profit, is today a non‑profit that oversees and controls the for‑profit, and going forward will remain a non‑profit that oversees and controls the for‑profit” https://www.reuters.com/business/openai-remain-under-non-profit-control-change-restructuring-plans-2025-05-05/
They were raising at $14B two years ago.
“The deal would roughly double OpenAI’s valuation from a prior tender offer completed in 2021, when OpenAI was valued at about $14 billion”
https://www.vanityfair.com/news/story/elon-musk-sam-altman-ai-fight
How can a nonprofit born company reach that valuation? Its structure now allows for profit but only up to a cap, yet investors pour in billions. It’s all future promise, not actual earnings.
This screams 2021 bubble all over again. Valuations are soaring without profits. It wouldn’t shock me if Nvidia reaches $10 trillion next year and OpenAI hits $5 trillion post IPO even if neither shows real profitability.
Valuation today is just a meme number. Companies can keep buying each other’s services to inflate reported revenue and keep investors excited.
Smart investors should see red flags not runway. Betting big on huge valuations without actual profit is gambling, not investing.
This isn’t sustainable. Bubbles stretch longer than people expect but they always burst.
The real test will be financial results, not the buzz. If revenues slow or margins collapse, these paper valuations could evaporate overnight. Maybe the next “big tech” revelation is just old tech with prettier packaging.