OpenAI Files for IPO as Trillion-Dollar AI Race Accelerates

OpenAI announced Monday that it has confidentially filed draft paperwork for an initial public offering with the Securities and Exchange Commission, joining rival Anthropic in a sprint to tap public markets. The ChatGPT maker said in a post on X that it "recently submitted a confidential S-1," using the formal name for an IPO filing. The company emphasized that it has not decided on timing, noting that "it may be a while because there are things we want to do that are likely easier as a private company."

The filing gives OpenAI the option to go public without committing to a specific date. The company said the decision involves "a complicated set of tradeoffs and this gives us the option to go public sooner if that ends up being best." No details on valuation, offering size, or terms were disclosed.

Anthropic filed for its own IPO on June 1, just a week before OpenAI's announcement. The two companies are now racing to Wall Street as the third and second mega-IPOs to follow SpaceX, which is set to begin trading as early as Friday at a roughly $1.75 trillion valuation, the largest IPO on record. Elon Musk's rocket company merged with his xAI artificial intelligence lab in February.

Anthropic's most recent funding round valued the company at $965 billion after it raised $65 billion last month. OpenAI was last valued at $852 billion in March, when it raised $122 billion in fresh cash to fuel expansion in AI development and the physical data center infrastructure required to run advanced models.

Both OpenAI and Anthropic are losing money due to the high cost of building artificial intelligence systems. The billions raised in recent funding rounds are being deployed toward developing advanced AI models and the extensive computing infrastructure those systems demand. Reuters reported that OpenAI is targeting a valuation of up to $1 trillion in a potential stock market debut that could come as early as September.

OpenAI CFO Sarah Friar said the company plans to reserve a slice of its eventual stock offering for retail investors. "Everybody wants to own part of a rocket company — I hope everyone wants to own part of ChatGPT," Friar told CNBC. "It helps when you're a consumer brand."

ChatGPT, launched in late 2022, has become a household name and gained hundreds of millions of downloads since its release. The app connects users to OpenAI's AI models for free. However, the company has faced mounting pressure in recent months. Executives have acknowledged the need to reduce internal distractions and not "miss this moment," according to reporting on internal discussions.

The company has reportedly missed multiple internal revenue and user targets after facing fierce competition from Anthropic and Google, whose Gemini AI model is gaining popularity. OpenAI also emerged from a contentious legal battle with Musk last month, who sued the company as it attempted to convert out of being a nonprofit. The company has faced numerous claims that ChatGPT harms young users, though it has denied responsibility in lawsuits.