7 Ways to Invest in OpenAI (ChatGPT)
OpenAI just made history. Again.
In October 2024, the company raised $6.6 billion — the largest VC round ever — at a valuation of $157 billion. The funds will be used for operations and R&D.
At the time of the round, OpenAI said it had 250 million weekly active users and 1 million paying business customers. How did it get here?
In November 2022, they released ChatGPT, an AI chatbot based on a large language model (LLM) that can generate detailed and human-like responses to user queries.
ChatGPT went viral, shattering user growth records and reaching 100 million users in just two months. The launch of this tool — and its API — has ushered in a new wave of development in artificial intelligence all over the world.
The lab also offers other products like Dall-E, an AI system that can create images and art from a text-based prompt, and Sora, a text-to-video generator.
OpenAI's main mission is to develop artificial general intelligence (AGI), which is the type of AI that can learn, think, and solve tasks like a human.
Can you buy OpenAI stock?
OpenAI is not a public company and cannot be bought in your typical brokerage.
There is no OpenAI stock symbol because it's a private company that hasn't yet made its shares available to the public via an initial public offering (IPO).
And, based on its mission, revenue trajectory, and the number of venture capital funds that want to own a stake, it may not ever need to go public.
Fortunately, you don't need to wait for it to go public to gain exposure to OpenAI and ChatGPT.
Here are six ways to invest in OpenAI stock today, despite it being a private company.
1. Buy shares directly (from current shareholders)
Hiive is a secondary marketplace where accredited investors can buy shares of private, VC-backed startups.
Accreditation requirements
To qualify as an accredited investor, you must meet one of the following criteria:
- Have an annual income of $200,000 individually or $300,000 jointly.
- Have a net worth that exceeds $1,000,000, excluding your primary residence.
- Be a qualifying financial professional with a Series 7, 65, or 82 license.
As of the time of this writing, there is 59 orders of OpenAI stock available for purchase:
A few of the other most active companies on Hiive are SpaceX, Figure AI, and Cerebras Systems. In all, there are over 2,000 private companies listed on the site.
On Hiive, sellers are typically employees, venture capital firms, or angel investors. Each seller can set their own asking price and quantity of volume offered.
Buyers can either accept asking prices or place bids and negotiate directly with the sellers.
2. Invest via the Fundrise Innovation Fund
The Fundrise Innovation Fund is a venture capital fund available to retail investors that invests in private technology companies.
The fund's investment thesis is centered around a few themes: Data infrastructure, real estate technology, machine learning, and artificial intelligence. It owns stakes in 15+ companies, including Anthropic, Databricks, Service Titan, and OpenAI.
While OpenAI isn't listed publicly as one of the fund's holdings, it does show as a holding once you register and become an investor in the fund. The fund has exposure to OpenAI through a special-purpose vehicle (SPV), which may prevent it from advertising the position to non-investors.
The Innovation Fund is open to all U.S. residents, has an annual management fee of 1.85%, and a minimum investment of just $10.
For more information, check out our Innovation Fund review.
3. Invest via the ARK Venture Fund
The ARK Venture Fund is an actively managed fund that invests based on its theme of "disruptive innovation."
The fund invests in both public and private companies, though all of the top 10 holdings are private companies. At the time of this writing, OpenAI is the 3rd largest position at 5.36%, behind SpaceX (12.87%) and Epic Games (5.36%).
Other companies in the fund's top 10 include Anthropic, Discord, Figure AI, and Zipline.
The fund is available to all investors and has a 2.90% annual management fee. You can learn more about the fund and how to invest in it via the ARK website.
4. Invest indirectly (via Microsoft)
You may also want to invest indirectly through Microsoft (MSFT), which has close ties to the lab.
The $6.6 billion in funding was raised in the form of convertible debt from Thrive Capital, Khosla Ventures, Microsoft, and Nvidia. Since the investment is currently in the form of debt, I'm not including this round in the following calculations (for Microsoft or Nvidia).
To date, Microsoft has invested $11 billion in the lab. It now owns 49% of the company and is entitled to up to 75% of its profits.
Microsoft's first investment came in 2019 and totaled $1 billion. Then, Microsoft invested another $10 billion in early 2023. Its stake is now worth nearly $80 billion.
Since it can be purchased in any stock brokerage account, buying Microsoft stock is the simplest way for investors to gain exposure to OpenAI.
Do you have a brokerage account?
If you don't have a brokerage account, here is our overview of the 7 best brokerage accounts in 2024.
However, if you're considering an investment, there are a few things to keep in mind.
Microsoft's ~$80 billion stake in OpenAI constitutes just 2.5% of its $3.1 trillion market capitalization. Microsoft's stock price may not be influenced much by its stake in the lab unless OpenAI becomes much bigger than it is now.
On the other hand, Microsoft has already begun integrating OpenAI's technology into many of its core products (such as Office, Windows, GitHub, and Bing). These integrations are collectively known as “Copilots.”
The best example of this is GitHub Copilot, which costs $10–20 per month and has surpassed one million paid users just 18 months after launch.
According to Microsoft's 2023 annual report, GitHub Copilot is “fundamentally transforming developer productivity, helping developers complete coding tasks 55 percent faster.”
Furthermore, Copilot is being rolled out to Office 365, of which there are 345 million paid members. I don't think it's overstating it to say that Microsoft, thanks to OpenAI, is in a league of its own regarding AI and AI integration.
Microsoft is planning to sell each Office Copilot subscription for $30 per month, on top of existing prices. Assuming this increases employee productivity, even by just a few percentage points, these will be no-brainer investments for businesses.
If 100 million users pay for a Copilot, that will add $36 billion in annual recurring revenue to Microsoft's top line, or an increase of about 15% above its current revenue of ~$245 billion.
Microsoft's Azure is also the second biggest cloud computing provider (after Amazon) and a lot of the computing for AI applications is likely to happen in the cloud.
This could help support the long runway of continued revenue growth in their cloud segment.
5. Invest in leading AI companies
There is a saying that in a gold rush, the people selling shovels make more money than the prospectors. In the context of investing in the AI “gold rush,” this would translate to owning the companies that produce the hardware that makes AI possible.
The two most relevant companies here are NVIDIA, which sells the best AI chips, and TSMC, which runs the factories used to make the chips.
Nvidia
Likely the biggest publicly traded winner in AI so far is Nvidia (NVDA).
Since bottoming in October 2022, shares of NVDA have rallied more than 1,000%, largely due to AI demand. Nvidia reported revenue of $30 billion last quarter, up 122% YoY, and EPS of $0.67, up 168% from last year.
Nvidia has a dominant market-leading position in developing the chips used to train and run supercomputers and high-powered AI networks.
It also provides the best “entire package” of AI-enterprise products, complete with hardware, software, and support services.
If you're bullish on the future of AI, it's hard to imagine a world where Nvidia isn't much bigger in the future than it is right now.
Nvidia also has an investment in OpenAI, having participated in its latest $6.6 billion round. It invested via convertible debt, however, and the exact terms are unknown.
Taiwan Semiconductor
Most of the chips that are being built to satisfy the demand for AI applications are made by Taiwan Semiconductor Manufacturing Company (TSM).
For example, all of Nvidia's advanced AI chips are manufactured by TSMC.
If the demand for AI computing continues to grow, then TSMC is likely to be one of the main beneficiaries.
More companies with AI exposure
Here are a few other tech companies with exposure to AI:
- Alphabet (GOOG, GOOGL): Google has invested heavily in AI for years and may be the biggest beneficiary from AI-powered search. Their Gemini (formerly Bard) chatbot is also one of the biggest competitors to ChatGPT, plus the Google Cloud Platform will likely be running a lot of AI applications in the future.
- Amazon (AMZN): Amazon runs Amazon Web Services (AWS), which is the world's biggest cloud computing provider. A lot of future AI computing is likely to be run on their servers.
- Meta Platforms (META): Meta's artificial intelligence lab (Meta AI) was launched in 2013. Since that time, Meta has poured billions of dollars into developing generative AI, computer vision, and human speech processing technologies.
There are also other private companies you may be interested in, such as Figure AI, Anthropic, and Scale AI.
6. Invest in exchange-traded funds
Instead of buying an individual stock, you may want to diversify across a broad range of companies focused on similar technology via an ETF:
- Roundhill Generative AI & Technology ETF (CHAT): This ETF invests in companies focused on generative AI, the same technology powering ChatGPT.
- ROBO Global Robotics & Automation ETF (ROBO): This fund buys companies from around the world that are focused on robotics and automation.
- First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT): This is another global fund focusing on artificial intelligence and robotics companies.
- Global X Robotics & Artificial Intelligence ETF (BOTZ): This fund focuses on companies involved in the development and production of robots or AI.
- iShares Exponential Technologies ETF (XT): This iShares fund invests in disruptive information technology companies.
While none of these ETFs own OpenAI, they will give you general exposure to the artificial intelligence industry.
7. Wait for the OpenAI IPO
The only way for retail investors to buy shares of OpenAI directly is if it went public. At this point, it's unknown if the lab will ever have an IPO.
While the lab was set up as a non-profit, those plans went out the window once it began taking investments from for-profit companies (like Microsoft) with commercial interest in its products.
It now has a rather ambiguous structure: OpenAI Global is a for-profit entity which is governed by OpenAI Inc, a non-profit entity.
This structure allows OpenAI to attract capital and talent, competing with leading for-profit tech companies, while also adhering to its mission, which is “to ensure that artificial general intelligence benefits all of humanity.”
The $157-billion non-profit is on track to generate revenue of $3.6 billion in 2024. Still, the company is projecting annual losses of $5 billion.
If it keeps burning cash like this, there's a chance the parent company will need to spin off its revenue-generating subsidiary and list its shares publicly.
How much is OpenAI worth?
The $157 billion valuation it received in October 2024 was up 82.5% from the $86 billion it was valued at for a tender offer in December 2023.
Here's a look at OpenAI's valuation history:
Its $157 billion valuation makes it the third most valuable private company in the world, behind only ByteDance (the parent company of TikTok) and SpaceX.
Frequently asked questions
Who owns OpenAI stock?
OpenAI began with an initial seed funding of $50 million from Elon Musk, who was a co-founder of the company before leaving in 2018.
The lab has raised a total of $21.9 billion from 34 investors over 9 funding rounds, with the majority of that funding — more than $11 billion — coming from Microsoft.
In April 2023, OpenAI raised $300 million from Thrive Capital, SVA, Andreessen Horowitz, Founders Fund, Alphabet, Wisdom Ventures, K2 Global, Sequoia Capital, and Tiger Global Management. The round valued the company at around $28.7 billion.
In October 2023, Thrive Capital announced it was leading another deal to purchase OpenAI shares from employees via a tender offer, valuing the company at $86 billion, or almost 3x more than the transaction that took place six months earlier.
In October 2024, Thrive Capital, Khosla Ventures, Microsoft, and Nvidia invested $6.6 billion (via convertible debt) at a valuation of $157 billion.
Does Elon Musk own a stake in OpenAI?
While Elon Musk was a co-founder and originally invested $50 million to start the lab, he sold his stake to Microsoft and left the company in 2018.
Musk had reportedly committed $1 billion in support before pulling out over disagreements about the speed of OpenAI's advancements.
Since then, he has repeatedly criticized the lab for not placing enough emphasis on safe AI development and has recently filed a lawsuit claiming CEO Sam Altman breached their contract by abandoning their original mission to focus on profits.
In April 2023, Musk incorporated X.AI, a rival AI firm.
Any views expressed here do not necessarily reflect the views of Hiive Markets Limited (“Hiive”) or any of its affiliates. Stock Analysis is not a broker dealer or investment adviser. This communication is for informational purposes only, and is not a recommendation, solicitation, or research report relating to any investment strategy, security, or digital asset. All investment involves risk, including the loss of principal and past performance does not guarantee future results. There is no guarantee that any statements or opinions provided herein will prove to be correct. Stock Analysis may be compensated for user activity resulting from readers clicking on Hiive affiliate links. Hiive is a registered broker-dealer and member of FINRA / SIPC. Find Hiive on BrokerCheck.
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