OpenAI Is Poised To Become The Most Valuable Startup Ever. Should It Be?

WIRED

a day ago

Aug 19, 2025 12:00 PM The AI startup is chasing a $500 billion valuation, with backers betting it can become the next Apple or Google. There are reasons for skepticism. Photo-illustration: WIRED Staff; Getty Images
OpenAI is reportedly on the verge of a roughly $500 billion valuation, a figure that would make it the most valuable private company in the world—bigger than SpaceX, TikTok's parent company Bytedance, and even public giants like Palantir. It's a staggering number for a company with an 'astronomical burn rate.' How is this even possible?
As Axios reports, there are actually two deals in play: a SoftBank-led round valuing the company at $300 billion, which won't close until year's end, and a secondary sale of employee shares at a far steeper $500 billion valuation. Most of the cheaper shares have already been snapped up, leaving investors to fight over the pricier ones.
One OpenAI investor—who spoke on the condition of anonymity, citing an NDA—compared it to the dawn of the internet. 'We're in one of the biggest technology shifts [in history],' the investor tells me. 'The outcomes continue to get bigger than people think.'
The investor argues the math for investing at the $500 billion valuation is straightforward: Hypothetically, if ChatGPT hits two billion users and monetizes at $5 per user per month—"half the rate of things like Google or Facebook'—that's $120 billion in annual revenue.
'That alone would support a trillion and a half dollar company, which is a pretty good return, just thinking about ChatGPT,' the investor says. 'it doesn't include all the rest of stuff they're working on, all the enterprise stuff, all the agentic stuff, all of the work they're doing on hardware.' Trillions of Dollars
The $5 figure is, admittedly, back of the envelope math. Today, ChatGPT has 700 million weekly active users—and fewer than 10 percent pay (OpenAI declined to comment on this figure). The investor's projections are ambitious, and seem to discount the threat of major players like Google and Meta eating OpenAI's lunch. 'The half a trillion dollar question now is, to what extent will OpenAI be able to retain the customers that it has acquired, and simultaneously be able to bring its costs to a point where it can, in fact, monetize at [hypothetically] $5 per user per month,' says Arun Sundararajan, a professor at New York University's Stern School of Business.
The bet here is that OpenAI is the next Facebook or Google. For investors buying in at $500 billion, 'they're expecting an IPO above a trillion in two to three years, otherwise the rate of return does not justify the investment,' says Glenn Okun, who's also a business professor at NYU. That would mean leaping into the top ten most valuable public companies in the world almost overnight. The investor says they have a longer time horizon than that, but 'of course an IPO is the most sensible path given the scale of the company.' Though the investor admits, yes, the company would need to be valued at more than $1 trillion to make the investment worthwhile.
Stranger things have happened—particularly to OpenAI. In the first seven months of 2025, the company doubled its projected annual revenue to $12 billion, which would estimate OpenAI is bringing in about $1 billion per month. Enterprise adoption has surged too, reaching 5 million paying business users this month. Not to mention what potential advertising revenue could do to its bottom line. To the investor, these are signs of a company with the momentum to win: 'People don't like unprecedented things, because most people like to pattern match,' the investor says. 'Everything this company has done has been unprecedented from the pace of its revenue growth to the AI technology.'
It's a nice dream. But OpenAI's spending is ballooning alongside its revenue. It's reportedly expecting a cash burn of $8 billion this year, and Altman said at a recent dinner in San Francisco that much of OpenAI's infrastructure costs are for inference—and he expects the startup to spend trillions of dollars on datacenters in the 'not very distant future.' That means in the fantastical future where ChatGPT may have billions of users, it would cost trillions of dollars to serve them.
It's extraordinarily expensive to scale such a power hungry technology. Even if the chips get faster and cheaper, the overall costs grow as the company works to train even bigger models and serve them to a growing user base sending off billions of queries, Sundararajan tells me.
The investor, however, brushes off profitability concerns, saying OpenAI can spread those massive costs across its entire user base. 'It is not cheap, and it's not for the faint of heart in terms of investment,' they add.
Okun takes a more skeptical approach. 'What we're looking at here is major capital investment with the sorts of valuations that may be very hard to to actually reach,' he says. A New Bubble
The $500 billion headline also has caveats. Private-market pricing reflects what a small number of investors are willing to pay for a small number of shares. In other words, the feeding frenzy is factored into the share price.
'In all likelihood, it's an approximation,' Okun says of the valuation. He adds that the number reflects both firm value and the competition between investors to get a slice of the pie. 'We really can't accurately disentangle those two streams of value in order to isolate firm value.'
Right now, investors appear to have a nearly insatiable appetite for AI startups. According to recent PitchBook data, a third of all venture dollars in the second quarter of this year went to five companies—all in the AI space—which is more than double the spending in 2024.
Is that a bubble? Altman admitted as much at the dinner. But in classic Altman fashion, he reminded attendees that's actually a good thing: 'When bubbles happen, smart people get overexcited about a kernel of truth,' he said. 'If you look at most of the bubbles in history [like] the tech bubble, there was a real thing. Tech was really important, the internet was a really big deal.'
Startup valuations have always reflected how well the CEO can sell a vision. At OpenAI, Altman cranks it up to eleven, and it's seemingly paying off. Meanwhile, investors are betting that ChatGPT becomes as indispensable as Google, that billions of people happily pay to use it, and competitors quietly fade into irrelevance. Whether any of that actually happens almost doesn't matter. For now, the story is worth half a trillion all on its own.
'There's definitely risk in it,' the investor tells me. 'The story is not fully written.'
This is an edition of Kylie Robison's Model Behavior newsletter . Read previous newsletters here.