Artificial intelligence (AI) firmOpenAIis reportedly discussing a share sale with investors, which could catapult its valuation to $90 billion. Thats a sharp rise from its earlier valuation this year, showcasing a threefold increase.
What Happened: As reported byThe Wall Street Journal,Microsoft Corp.MSFT , which owns a 49% stake in the startup, is banking on revenues of $1 billion this year. The AI firm also has ambitious plans to rake in billions more by 2024. OpenAIs primary revenue model revolves around charging users for access to a premiumversion of ChatGPT and licensingits AI bots large language models to businesses.
The Deal: The proposed share sale is designed to enable OpenAIs employees to offload their existing shares, rather than the company issuing new shares to attract additional capital. Representatives from OpenAI have begun pitching the deal to investors, although the terms are subject to change, according to WSJ.
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Impact: Should the companys valuation exceed the $80 billion threshold, OpenAI would join the ranks of the worlds most highly-valued startups, following closely behind Elon Musks SpaceX and ByteDance, the parent company of TikTok, the Journal reports
Why It Matters: The potential $90 billion valuation is a clear indicator of the growing importance and value of AI technology. As OpenAI continues to develop its offerings, this valuation could set new precedents in the AI industry, raising the bar for competing firms. Moreover, with Microsofts stake in OpenAI, the tech giant could also benefit from the startups success.
Market Reaction: Despite this news, Microsofts stock closed 1.7% lower on Tuesday, extending a three-day losing streak. September has proven to be the tech giants most challenging month in 2023, with a 4.8% drop as of Sept. 26.
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