How to Invest in OpenAI Stock? – Beginner’s Guide

When it comes to global impact, few companies can compare to OpenAI. By the end of 2022 and the beginning of 2023, the business’s ChatGPT chatbot had gone viral. More than 100 million people are using it presently.

 

At this time, investing directly in OpenAI is not an option. Nevertheless, there are other avenues via which one might indirectly support the inventor of ChatGPT. Another option is to put your money into businesses that will be able to take advantage of the AI boom that OpenAI has sparked.

 

Here, you will find comprehensive information regarding investing in OpenAI.

 

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 About OpenAI IPO

 

In order to continue growing, many private companies that have found success opt to go public through an initial public offering (IPO). But it seems like OpenAI isn’t planning to go public anytime soon.

 

Sam Altman, co-founder and CEO of OpenAI, stated in June 2023 that the business had no intentions to launch an initial public offering. This hesitation to go public is due to two main factors. To start, it appears that OpenAI isn’t in need of any more funding right now. Second, the firm is worried that going public with its stock could stifle its AI development efforts.

 

Specifically, OpenAI has pledged to create AI super intelligence and artificial general intelligence (AGI), which are forms of technology that can learn on their own and outperform even the most incredibly intelligent humans. According to Altman, “When we develop superintelligence, we are likely to make some decisions that most investors would look at very strangely.”

 

 

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How to Invest in OpenAI Stock?

 

There is currently no way to purchase OpenAI stock, and that is the short answer. There is also no estimated time frame for when this will be possible for you. The next best thing, though, would be to invest in OpenAI through the stock of other publicly listed firms. To indirectly invest in the development of ChatGPT, you can buy one of these three stocks.

 

 

 

 

Microsoft

Purchasing Microsoft stock (MSFT -1.16%) is the optimal strategy for investing in OpenAI. In 2019, the tech behemoth first put $1 billion into OpenAI. Its Azure cloud platform also benefited from new artificial intelligence supercomputing technologies developed in collaboration with OpenAI. This deal included OpenAI migrating its services to Microsoft’s Azure platform. When it came time to promote new AI technology, Microsoft also became OpenAI’s desired partner.

 

Microsoft increased their funding for OpenAI in 2021. The release of ChatGPT, an artificial intelligence chatbot, in late 2022 set off a chain reaction. The opportunity was immediately recognized by Microsoft. Official confirmation of the third phase of the company’s cooperation with OpenAI came in January 2023. The decision by Microsoft Azure to become OpenAI’s only cloud provider was a crucial part of the enlarged partnership.

 

In its third round of funding, Microsoft did not disclose the exact amount of additional money it spent in OpenAI. Despite this, other sources claimed that Microsoft invested an additional $10 billion in OpenAI. Reportedly, until Microsoft recoups its whole investment, it will earn 75% of OpenAI’s income under the conditions of the arrangement. Then, the smaller AI developer would be 49% owned by Microsoft.

 

Microsoft made a concerted effort to incorporate OpenAI’s technologies into its products in 2023. The Bing search engine from Microsoft makes use of OpenAI’s most recent and powerful AI large language model (LLM), GPT-4. After the “new” Bing made a splash with its somewhat strange responses, Microsoft made an effort to tone them down.

 

Microsoft 365 productivity apps also include OpenAI technology. Microsoft 365 Copilot is a new function that streamlines the process of creating initial versions of documents in Word and presentations in PowerPoint.

 

By utilizing Copilot, users can effortlessly generate high-quality data visualizations and do trend analyses in Microsoft Excel. It provides a synopsis of email threads and reply suggestions for Outlook. Not to mention, it provides a synopsis of Microsoft Teams business communications platform discussions and suggests next steps.

 

Microsoft has ties to OpenAI, but that’s not the only reason to consider buying shares. Cloud services, gaming, and quantum computing are just a few of the other exciting digital sectors where the corporation is a frontrunner.

 

 

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Khosla Ventures Acquisition Co.

Another early backer of OpenAI was Khosla Ventures. Along with the Reed Hoffman Foundation, the venture capital firm awarded OpenAI with startup money in 2019.

 

Khosla Ventures was established in 2004 by Vinod Khosla, who was a co-founder of Sun Microsystems. Its mission was to invest in innovative startups in the early stage of their growth, following the principle of “bold, early, and impactful.” Many of the firms that have come out of Khosla Ventures’ investment programs have become quite successful after going public.

 

Block (SQ -1.01%), the operator of the Square and Cash App platforms, and Upstart (UPST -8.5%), a consumer loan startup backed by artificial intelligence, are two examples of fintech companies. Guardant Health (GH -4.1%), an industry trailblazer in liquid biopsy, and Oscar Health (OSCR -1.93%), an innovative health insurance provider, are both supported by the venture capital firm.

 

While Khosla Ventures itself is inaccessible to investors, the two special purpose acquisition companies (SPACs) it has established are open for purchase. Initial public offerings (IPOs) were held in March 2021 by Khosla Ventures Acquisition Co. (KVSA 0.47%) and Khosla Ventures Acquisition Co. III (NASDAQ:KVSC).

 

The artificial intelligence (AI) medication discovery and development startup Valo Health was merged with Khosla Ventures Acquisition Co. in June 2021. But in the end, in November of 2021, the agreement fell through. Another possible merger partner is presently being evaluated by Khosla Ventures Acquisition Co.

 

 

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Infosys

OpenAI gained early support from Infosys, an IT consulting firm based in India (INFY -0.57%). Infosys co-founded the AI developer back in 2015, when CEO Vishal Sikka wrote a blog post about it. According to Sikka, Infosys would be able to reap the benefits of OpenAI’s technologies in due time.

 

It turned out that he was right. Nandan Nilekani, co-founder and chairman of Infosys, stated during the annual meeting in June 2023 that the business has adopted a “AI-first strategy.” Nilekani made notice of the recent “advances in generative AI,” which refers to the use of AI to create unique material and was popularized by ChatGPT, but he refrained from mentioning OpenAI or Infosys’ investment in the AI pioneer.

 

Topaz, Infosys’s platform, was released in May 2023. Topaz was called by the business “an AI-first set of services, solutions, and platforms using generative AI technologies.” Clients are able to analyze data more rapidly using the new solution. Using generative AI, Infosys has fifty active client projects, according to CEO Salil Parekh, who made the announcement during the June meeting.

 

 

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Is OpenAI Profitable?

 

We are unable to ascertain OpenAI’s profitability since the company does not divulge its financial records. Having said that, OpenAI is presently losing money, according to May 2023’s The Information.

 

The online news outlet cited three anonymous insiders acquainted with OpenAI’s financials as saying the business lost close to $540 million in 2022, almost twice as much as the previous year.

 

In March 2019, OpenAI admitted that it needed “to scale much faster” than anticipated. Cloud computing services, personnel, and the development of artificial intelligence supercomputers cost billions of dollars.

 

The original structure of OpenAI was that of a nonprofit organization. The company reorganized itself as a “capped-profit” hybrid for-profit/nonprofit in order to attract investors and finance its ambitious expansion goals. The plan calls for OpenAI’s workers and investors to share in the company’s success up to a certain limit.

 

 

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Is OpenAI a Good Investment?

 

Many long-term investors may wish to explore indirect options, even if there is currently no pure-play way to invest in OpenAI. One possible way to benefit from OpenAI’s technology is to purchase Microsoft shares. When it comes to OpenAI, no other stock compares.

 

It is quite probable that generative AI, like OpenAI’s GPT-4, would revolutionize various industries. According to McKinsey & Company, a global consulting organization, the potential yearly economic impact of generative AI might reach $4.4 trillion. Except for the United States, China, and Japan, that sum exceeds their GDP at the present time.

 

The generative AI boom may be good for some AI stocks, so investors should look into those as well. One company that produces GPUs that are perfect for running AI programs is Nvidia (NVDA -0.92%). GPUs from Nvidia may still be in high demand, even if a competitor to OpenAI, like AutoGPT, ends up being more successful. One drawback of purchasing Nvidia shares is the high level of expectation for future growth that is already reflected in their share price.

 

Consider investing in companies that are making use of AI as well. As an example, Salesforce (CRM -0.36%) collaborated with OpenAI to create Einstein GPT, a content generator for CRM operations. The fact that Atlassian (TEAM -0.55%) collaborated with OpenAI to incorporate generative AI into its products raises the prospect of another option.

 

 

 

 

 

FAQs

 

Are OpenAI shares available for purchase?

At this time, no stock exchange has listed OpenAI’s shares. Additionally, there has been no announcement of an IPO from the company. Shares of firms like Microsoft or Salesforce, who have invested in or cooperated with OpenAI, are the greatest choices for investors.

 

 

Which AI funds are best to invest in?

Like regular equities, you can invest in AI-focused exchange-traded funds (ETFs). Top AI stocks are held by multiple ETFs. Among these AI ETFs, the one with the most assets under management is the Global X Robotics & Artificial Intelligence ETF.

 

 

 

 

 

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Conclusion

 

Without a doubt, OpenAI is among the front-runners in generative AI. It’s quite unlikely that ChatGPT will be a passing trend. We may be entering a new age when artificial intelligence (AI) is far more pervasive, thanks to the capabilities of OpenAI’s technology. You may purchase shares in firms that have a chance to benefit from OpenAI’s AI advancements, even though you can’t invest in the company itself.

 

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