Speaker 0:  openai wants a trillion dollar debut, and sam altman reportedly refuses to take the company public for less. could protect that valuation, but it also gives anthropic more time to steal the spotlight and forces microsoft to keep defending one of history's biggest ai bets. so openai confidently sub confidentially submitted a draft s one on june 8, and we talked about this, but officially said it has not decided when or even whether to move forward soon. subsequent reporting says executives are considering waiting until 2027 rather than accepting a public valuation now below $1,000,000,000,000. so this ipo would test whether public investors believe today's astronomical private ai valuations or demand evidence of substantial profits before paying trillion dollar prices. why do you think about this move, john?

Speaker 1:  this surprised me, and i thought it had more to do with the fact that they weren't ready until i actually read the article. and so let's let's kinda talk about why to delay an ipo. so, traditionally, obviously, companies go public to raise capital, where openai is a little different because they've already raised an unprecedented amount of private funding. so the, like, the recent financing rounds, they valued the company at $300,000,000,000. they've raised tens of billions of dollars. they've got massive backing from institutional investors, and they've got a long runway for expansion, apparently. i didn't know that. i thought they were running low on funds. and the other thing too is now they don't have to disclose anything, because, obviously, they've done a lot of a few controversial things. like, first, they were not profit. now they were for profit, all that sort of stuff. so remaining private allows them to avoid quarterly earnings pressure. they can continue with their long term ai investments. they can spend aggressively on infrastructure. they can avoid constant public scrutiny, and they can maintain strategic flexibility. so i think the other part to this too is that the microsoft relationship complicates things, because microsoft has invested tens of billions of dollars into openai. and so unlike traditional start up investment, microsoft's economic interest, it involves both ownership and commercial agreements, which is kind of different. so, the questions investors continue asking include how much of openai does microsoft actually own, and they would have to disclose that. how will profits eventually be shared? what happens if openai becomes fully independent? will microsoft retain exclusive cloud rights? so a lot of these answers can affect both companies' valuations. and so openai has an unusual corporate structure as well. like, there's a whole bunch of things that make sense now that i've read into the details. what do you think? do you think this is what are your thoughts on

Speaker 0:  this? we talked earlier about these three ipos, and i was wondering if there was enough investment to that's right. yeah. keep all of this going. like, is it enough for 3,000,000,000,000 ipos? you know, investors really have only so many pockets for all this stuff. so i definitely think that's a concern. but let's just talk about the numbers for a bit. i think, openai was a little bit short on cash, but they raised a 122,000,000,000 in committed capital in march. so that financing, it valued the company at 852,000,000,000 post money. 1,000,000,000,000 listing would require an increase of approximately a 148,000,000,000 or 17.4% over that valuation. and we talk about microsoft ownership. microsoft reported owning approximately 27% of openai on an as converted diluted basis following the 2025 recapitalization. so there's been some more investment talk and stuff since then, so, you know, that's probably changed somewhat. and anthropic raised 65,000,000,000 at 965,000,000,000 post money valuation in may. microsoft ai business exceeded 37,000,000,000 annual revenue run rate, up a 123% year over year in q three twenty twenty six. so the story is really driven by the economics of the frontier model scaling. training and serving advanced models requires enormous clusters of gpus and specialized accelerators, high bandwidth memory, networking infrastructure, electricity, and cooling. evaluation assumes that openai can convert capital invest intensive infrastructure into recurring revenue from chat g to p, enterprise subscriptions, apis, coding products, and autonomous agents while eventually reducing costs of producing each answer. and we also talked about there's two things hardware wide that openai is getting into. they wanna build their own chips, and they have some sort of device going on with johnny i, which may, you know, be a part of this. so i think they're delaying, because it's not optical right now based on where their revenue is at, where their spend is at, and they've got enough stuff coming out or announcements in the next six months to a year about potential, starting a foundry, starting a chip creation, maybe this other device that will, take them to the next level. also, they're changing their subscription models. and as i keep saying, they keep telling us it's cheaper and cheaper every time a model comes out. but every new model cost consumers more and more every time. so they're trying they're raising the revenue. if they wait two or three more models, it'll be a $100 per million output tokens, and their revenue will go from here to here. so that is part of the reason too. i think that they don't quite stand up against anthropic and spacex now, and spacex does have the best, with their hardware, with all the different systems they have. they have the best value. however and that's why they're 1,878,000,000,000 or whatever it is. the anthropic one looks like it's definitely number two in that platform where openai is number three or maybe even less than that. and i think they need to move that needle if they wanna get that up to a trillion dollars. so that's where i think they're headed, and they need to let a couple more things out, before they're gonna be able to value themselves there.

Speaker 1:  yeah. true. yeah. like, so microsoft definitely benefits from this, and we talked about that. so let's talk about why they benefit. so they continue re receiving, azure revenue, enterprise ai customers, office copilot integration, github copilot growth, and exclusive commercial partnerships while they avoid market volatility, lock up expirations, ownership dilution concerns, and public investor pressure around openai's quarterly performance. so it's a win for both companies to delay the ipo, and i didn't. i thought, it was more because they were worried about anthropic, but no. it's more because of the structure of the investments that they have and their partnerships that they have and things like that. so, they're a lot more complex than i had thought originally. and we'll never know how complex until they go public.

Speaker 0:  yeah. agreed. and it's gonna be i think they're gonna be really scrutinized when they go public because of, their messed up history.

Speaker 1:  yeah.

Speaker 0:  so we'll have to see. they were a non not for profit at one point, then they decided to change and blah blah blah. so that was all everything. openai's ipo delay is a high stakes attempt to defend a trillion dollar narrative before public investors finally get to inspect the financial machinery underneath. would you buy openai at a trillion dollar valuation, or does make that price impossible? to justify, let us know what your thoughts are in the comments below.