OpenAI in talks for $500 billion valuation through employee share sale

OpenAI is in early discussions with investors about a secondary share sale that could value the artificial intelligence firm at around $500 billion, according to people familiar with the talks.

The potential deal would allow current and former employees to sell several billion dollars’ worth of stock, providing liquidity ahead of a possible future public offering.

The discussions come just months after OpenAI announced a $40 billion primary funding round led by SoftBank at a $300 billion valuation.

Thrive Capital, an existing investor, is reported to be in talks to lead the secondary sale. Bloomberg first reported the negotiations.

The $500 billion valuation would mark a dramatic increase and reflect both OpenAI’s rapid revenue growth and the sustained surge in demand for its flagship product, ChatGPT.

The company said earlier this week that ChatGPT is approaching 700 million weekly active users, up from about 400 million in February.

Annual recurring revenue has doubled since mid-year and is projected to reach $20 billion by year-end, up from $10 billion in June, according to people with knowledge of the figures.

The employee share sale underscores how private companies are using secondary transactions not only to reward early workers but also to establish updated valuations in a competitive capital market.

Rivals are pursuing similar strategies. Anthropic, a competitor backed by Google, is reportedly seeking up to $5 billion in new funding at a valuation of $170 billion, nearly triple its level earlier this year.

The valuation jump also comes as OpenAI rolls out new products to expand its lead in generative AI. The company this week released two open-weight language models, its first open releases since GPT-2 in 2019, aimed at developers seeking lower-cost, customizable options.

The surge in OpenAI’s valuation reflects broader dynamics in the AI sector, where firms are racing to secure talent and capital.

Technology giants, including Meta and Microsoft, are competing aggressively with multibillion-dollar packages to attract top AI researchers and executives.

Microsoft remains OpenAI’s largest backer, with a multiyear partnership that has integrated the startup’s technology into its products and cloud platform.

OpenAI is also considering a corporate restructuring that would move it away from its current capped-profit model, a step that could pave the way for an eventual IPO.

CFO Sarah Friar said earlier this year that a public listing would come only when both the company and the markets were ready.

While the $500 billion valuation is not final and talks could still change, the negotiations highlight investor confidence in OpenAI’s growth prospects and the market’s appetite for leading AI companies, even amid questions about governance and long-term profitability.

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