OpenAI, the creator of ChatGPT, is reportedly in talks to sell existing employees’ shares at a valuation between $86 billion and $90 billion. The artificial intelligence startup has gained significant attention and valuation in the market. As of now, it appears that OpenAI is exploring options related to the sale of shares.
Investing in AI: A Comprehensive Guide
Introduction
Investors seeking opportunities in the rapidly evolving landscape of artificial intelligence often find themselves intrigued by OpenAI, the pioneering AI research organization behind the renowned ChatGPT. While the desire to invest in OpenAI directly is prevalent, the reality is that the company is currently privately owned, with no shares available on major stock exchanges. In this comprehensive guide, we explore alternative avenues for investors to gain exposure to the flourishing AI industry.
Understanding OpenAI
Founded in 2015, OpenAI operates as a hybrid entity, consisting of the non-profit OpenAI Inc. and its for-profit subsidiary OpenAI L.P. The organization aims to develop highly autonomous systems, replicating human performance and speech patterns. OpenAI gained prominence with its Generative Pre-trained Transformer (GPT) technology, which produces coherent and human-like text from open search engine data. Notable projects include image generation software Dall-E and AI-generated translation software Whisper.
Why You Can’t Buy OpenAI Stock
OpenAI, as of August 2023, remains a privately held company, which means it is not traded on public stock exchanges. The distinction between private and public companies lies in ownership structure; public companies are owned by shareholders from the general public, whereas private companies have a limited set of investors. OpenAI’s hybrid model, comprising both nonprofit and profit-oriented entities, has contributed to the decision to remain private.
The IPO Dilemma
While companies often transition from private to public ownership through an Initial Public Offering (IPO), OpenAI’s leadership has explicitly stated no plans for an IPO. This decision, rooted in the organization’s unique structure, disappoints investors eyeing innovative tech stocks.
How to Prepare for OpenAI’s IPO
Step 1: Open a Brokerage Account
To position yourself for potential OpenAI stock availability, start by opening a brokerage account. Choose an account type that suits your investment goals, whether it’s a flexible taxable account or a retirement-oriented IRA.
Step 2: Familiarize Yourself with the Tech Market
Understand that AI is just a fraction of the broader tech market. Research and invest in other top-rated tech-oriented stocks to gain a holistic understanding of the AI landscape.
Step 3: Stay Informed with Company Updates
Regularly check OpenAI’s corporate announcements and blog for updates on its development. Staying dynamic and informed positions you well for potential investment opportunities.
Alternative Investments in AI
While OpenAI remains off the public market, investors can explore other AI-related stocks and ETFs.
5 Related OpenAI Stocks to Invest In
- Alphabet Inc. (NASDAQ: GOOG): Google’s parent company with extensive AI research.
- NVIDIA (NASDAQ: NVDA): A leading microchip manufacturer heavily invested in AI.
- IBM (NYSE: IBM): A technology conglomerate with a history of AI research.
- Microsoft (NASDAQ: MSFT): Major blue-chip company with significant AI investments.
- Meta Platforms (NASDAQ: META): Known for its Facebook network, active in AI research.
5 ETFs with Exposure to OpenAI
- Roundhill Generative AI & Technology ETF (NYSE: CHAT): Actively managed, offering exposure to generative chat technology.
- Global X Robotics & Artificial Intelligence ETF (NASDAQ: BOTZ): Invests in companies associated with AI development.
- ROBO Global Robotics & Automation ETF (NYSE: ROBO): Provides access to companies at the forefront of technology innovation.
- First Trust Nasdaq Artificial Intelligence and Robotics ETF (NASDAQ: ROBT): Offers international exposure in AI investments.
- iShares Exponential Technologies ETF (NASDAQ: XT): A tech fund with a lower expense ratio, providing diversified exposure.
Investing in AI: A Word of Caution
While AI presents exciting investment opportunities, it’s crucial to approach this sector with caution. The volatility associated with new technology underscores the importance of integrating AI investments as a part of a diversified portfolio. Consider opting for ETFs over individual stocks for a more balanced and risk-managed approach.
Disclaimer: The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.