A reported OpenAI IPO may test investor tolerance for the AI boom

The AI lab has begun informal talks with Wall Street banks and hired new finance executives to prepare for the listing, according to a report from The Wall Street Journal. Representatives for OpenAI did not immediately respond to a request for comment from Fortune. But while the company is currently valued at $500 billion, it has said it doesn’t expect to turn a profit until 2030.

The timing of OpenAI’s IPO also comes as some investors are beginning to question whether generative AI can deliver returns that justify the trillions being poured into the sector. Despite the hype around ChatGPT and similar tools, concerns are mounting that AI companies may struggle to make enough money from their technology to cover their massive infrastructure costs.

OpenAI may be contemplating an IPO before the end of the year in part to get out in the public market ahead of its rival Anthropic, according to The Journal’s reporting. Anthropic has rapidly gained enterprise customers and has told investors it may break even sometime in 2028, two years ahead of OpenAI. The thinking may be that this faster path to profits could make Anthropic more attractive to investors. But by getting to the public markets ahead of it, OpenAI may be able to capture the lion’s share of pent up demand for pure play AI investments, especially among retail investors.

To date, with the exception of AI chip company Nvidia and some of the so-called neocloud companies such as CoreWeave, there have been relatively few pure play AI companies in the public market. Most of the ways to play the AI boom have come from investing in hyperscalers, such as Alphabet and Microsoft, that have long-standing advertising, cloud and software businesses, with which their AI offerings are interwoven.

The report that OpenAI may be bringing forward its IPO to this year also underscores the almost incomprehensibly large amounts of money these AI companies are burning through as they rush to build massive data centers in which to train and run their AI models. OpenAI has reportedly committed to $1.4 trillion worth of data center spending by 2033. Although the company has raised about $64 billion to date and is currently valued at about $500 billion, OpenAI is already in the midst of a massive fundraising push that could stretch through much of 2026, with the company reportedly looking to raise another $100 billion at a $830 billion valuation. An IPO would likely be on top of this funding round, not a substitute for it.

OpenAI wouldn’t be the first unprofitable company to go public. Amazon, for example, remained unprofitable for years after its 1997 IPO, posting losses for much of its early public life as it prioritized growth and market share. However, unlike Amazon at the time of its IPO, OpenAI is burning through billions of dollars annually. Investment bank HSBC projects OpenAI will face a $207 billion funding shortfall by 2030—the gap between what it generates and what it needs to spend—despite earning as much as $213 billion in revenue by then.

If OpenAI can successfully IPO while burning billions and projecting losses through 2030, it’s a sign the AI boom still has room to run. However, if investors balk—if the IPO stumbles or gets repriced—it will signal that the market has finally reached its tolerance threshold for hype over fundamentals.

The war for talent may also be pushing OpenAI towards an early IPO. An imminent public offering could help OpenAI retain employees who might otherwise be tempted to leave—few would want to walk away when their shares are about to vest and become liquid. The prospect of going public could also attract new talent in the pre-IPO period, as incoming employees might receive shares they can sell shortly after the listing.

There are risks to going public. Being public will require OpenAI to disclose much more about its financial condition and cash burn. Shareholders will also want to see quarterly results, something that could potentially complicate OpenAI’s mission of developing “safe, beneficial AI.” Even CEO Sam Altman has said he’s not thrilled about the prospect of being a public company CEO. 

The public may also have to disclose more about the risks associated with its products.  The company is dealing with lawsuits and pressure from regulators over alleged psychological harms caused by its chatbot.

Once public, OpenAI’s compensation packages may also become less attractive in some ways—new hires would receive stock options rather than pre-IPO equity, and those options may or may not prove valuable depending on the company’s post-IPO performance and stock price trajectory.