OpenAI files confidential paperwork for potential IPO

OpenAI has filed confidential paperwork for an initial public offering, giving the maker of ChatGPT the option to enter public markets as competition intensifies across the artificial intelligence industry.

The company announced the move Monday, saying it had submitted a confidential S-1, the formal registration document companies file with regulators before a stock market debut. OpenAI said it had not settled on when, or whether, to move ahead with a public listing.

“We recently submitted a confidential S-1. We expect it to leak so we’re just announcing it,” OpenAI said in a statement posted on its website. “We have not decided on timing yet; it may be a while because there are things we want to do that are likely easier as a private company. But it’s a complicated set of tradeoffs, and this gives us the option to go public sooner if that ends up being best.”

A confidential filing allows OpenAI to receive private feedback from regulators before submitting a public version of the document to the Securities and Exchange Commission. That public filing would include details on the company’s finances and outline its investment plans.

OpenAI, valued at $852 billion, has been raising and spending large sums as it builds more advanced AI models and the computing systems needed to run them. NBC News reported that the company’s valuation reached that level in March after it raised $122 billion in new cash to support its AI ambitions, including data center infrastructure and cloud computing capacity.

The filing comes amid a rush by major AI companies toward public markets. Anthropic, the company behind the Claude chatbot and one of OpenAI’s main rivals, filed for its own IPO last week. NBC News reported that Anthropic was worth $952 billion in its most recent funding round.

SpaceX, Elon Musk’s rocket company, has also filed for an IPO, with shares expected to begin trading Friday in what CBS News described as set to be the biggest IPO ever. SpaceX owns Musk’s artificial intelligence company xAI and has included plans to expand its AI computing power.

OpenAI became widely known after launching ChatGPT in late 2022. The app, which connects users to the company’s AI models for free, has since been downloaded hundreds of millions of times, according to NBC News.

The company’s path toward a possible public listing has unfolded alongside legal and business pressure. CBS News reported that OpenAI’s filing came weeks after a judge threw out a case brought by Musk that could have derailed its IPO plans. Musk and OpenAI CEO Sam Altman co-founded the company in 2015. NBC News reported that OpenAI had recently emerged from a contentious legal battle with Musk, who sued the company as it tried to move away from its nonprofit structure.

OpenAI has also faced claims that ChatGPT harmed some young users. The company has denied responsibility, saying in response to one recent lawsuit that it was not to blame, NBC News reported.

Inside the company, executives have acknowledged the need to focus. NBC News reported that OpenAI leaders have said the company must reduce the number of “side quests” and not “miss this moment,” while also reporting that the company has missed “multiple internal revenue and user targets” amid competition from Anthropic and Google’s Gemini model.

OpenAI Chief Financial Officer Sarah Friar has said the company plans to reserve part of any future stock offering for retail investors, citing the need to build public trust in AI.

“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.”