OpenAI is attempting to lead the charge in the 4th Industrial Revolution of artificial intelligence. Elon Musk wants to level-up humans to our next stage of technological genius.
Artificial intelligence is the top-growth, innovation potential leader for the 21st century. Currently, the best radiologist, chess player, and data scientist is a computer.
Wait until the best of every profession (even creative fields like artists, writers, and poets) are also a computer. This is where OpenAI is trying to drive the conversation.
Whoever takes first place in artificial intelligence is going to be the wealthiest investor/creator in the history of human existence. Big Data is the oil of the 21st century.
OpenAI is incredibly transparent about their mission and vision statement. I’m not sure how Elon continues to create business endeavors, but his long-term outlook is incredible.
“OpenAI’s mission is to ensure that artificial general intelligence (AGI)—by which we mean highly autonomous systems that outperform humans at most economically valuable work—benefits all of humanity.
We will attempt to directly build safe and beneficial AGI, but will also consider our mission fulfilled if our work aids others to achieve this outcome.
We commit to use any influence we obtain over AGI’s deployment to ensure it is used for the benefit of all, and to avoid enabling uses of AI or AGI that harm humanity or unduly concentrate power.
Our primary fiduciary duty is to humanity.
We anticipate needing to marshal substantial resources to fulfill our mission, but will always diligently act to minimize conflicts of interest among our employees and stakeholders that could compromise broad benefit.”
I personally love how OpenAI notes their primary responsibility is to humanity. This resembles the thoughts of Andrew Yang and Sam Harris.
AI will be the best economic driver of wealth and prosperity, but it will eliminate jobs for anyone lacking technological ingenuity. We must continue to look-out for one another!
Artificial Intelligence “Golden Age”
UBS shared an annual report covering the “golden age” for AI.
“This period will become a golden era in the advancement of all things technological – the ever-accelerating development of AI will compound the pace at which we invent.
Like all technologies, AI will be created with a singular purpose: to aid humanity. Naysayers and Hollywood moviegoers need not fear the rise of the machines.
On the contrary, self-aware robots and programs will become instrumental in our quest to resolve society’s mega-challenges like climate change, antibiotic-resistant bacteria and diseases, aging populations and many more.
And if you think your iPhone is cutting-edge, think about the possibilities of AI-powered consumer devices; gone will be the days of fat-fingered typos and lost GPS signals.
By 2030, increasingly useful applications of AI will translate into meaningful social and economic changes.
One such outcome, for example, will be much lower costs of traditional goods and services, which will effectively narrow socioeconomic disparities worldwide, as AI eliminates imperfections in supply chains and enhances overall productivity.”
Data = 21st Century Oil
As I mentioned in a proceeding paragraph, data is viewed as the new oil of the 21st century economy. Industry titans are relying more on data analytics than traditional manufacturing.
Predictive analytics has become an enormously profitable business practice. It allows companies to target their key customers, rather than wasting advertising dollars on the general public.
I’m sure everyone has heard the infamous “Target Pregnancy Story”, but if you haven’t here you go!
Target, for example, has figured out how to data-mine its way into your womb, to figure out whether women are expecting in the future.
As Target’s computers crawled through the data, they were able to pinpoint 25 products that, when analyzed together, allowed him to assign each shopper a “pregnancy prediction” score.
Well, one day, Target used their proprietary algorithm to send diaper coupons to a teenage girl, and her father was livid! I mean c’mon, this girl was only a teenager and couldn’t possibly be pregnant. Right?
Well, turns out she was pregnant, and Target figured it out before the Grandfather! Oops!
This anecdote is exactly how OpenAI can provide big value for their clients.
Another Musk Venture?
Who would run the day-to-day operations for OpenAI? At the moment, Elon is the CEO, but he will outsource the day-to-day operations to some of his most trusted advisors.
Forbes wrote an article titled, “How Tesla Can Get To A $1 Trillion Valuation“.
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“Tesla’s stock has rallied by about 5x this year, with its current market cap standing at about $400 billion. Can the stock continue to outperform, joining the rarefied group of companies with a $1 trillion market capitalization?
It’s possible. Although Tesla stock looks pricey at current levels, if the company executes well and the markets continue to view its prospects favorably, a $1 trillion valuation remains within reach by 2025.”
Musk built Tesla from the ground-up, self-funded, and he’s already created a $400 billion market dominant force. Can he possibly do the exact same thing with OpenAI stock?
Now, pair Musk’s visionary genius with the deep pockets and human capital of Microsoft. This is going to be a joint venture, steamrolling any competition that tries to step foot in their way.
Don’t hear what I’m not saying; nothing in business is ever guaranteed. I honestly believe OpenAI could be the biggest business transformation in the following decades.
They have a deep mission, world-class talent, unlimited funds, and a cause worth dying over!
As Elon as recently become the wealthiest man on Earth, I find it highly unlikely he will spend much time or effort on OpenAI in the future.
He appears to be more concerned with his next mission, colonizing Mars for the sake of mankind. On top of Tesla, The Boring Company, Neuralink, I doubt OpenAI remains a top priority.
OpenAI Stock IPO
The OpenAI IPO date is not known, and the firm is still working on the economic feasibility of pricing their service, research and development, and scaling their business model.
Elon Musk will have absolutely no trouble securing funding for payroll, working capital, and other cash cycle issues. He is the second wealthiest man alive, and he could use his own money in a crunch.
However, there is no doubt capital markets would give their first-born to OpenAI after viewing the success of Tesla. Due to these factors, an OpenAI IPO is not essential anytime soon.
My personal thoughts (off the record) are that OpenAI will never go public. Elon still regrets taking Tesla public from time-to-time (even though it has made him over $190 billion).
Musk has fought with financial analysts during earning calls and had public spats with short sellers Jim Chanos and Steve Eisman (the Big Short guy).
Staying private prevents short sellers from devastating your firm over short-term concerns, while missing the forest for the trees long-term.
OpenAI Stock Price
MIT’s Technology Review has an interesting summary of OpenAI’s latest funding and commercial use.
“Attaining AGI safely is so important, it continues, that if another organization were close to getting there first, OpenAI would stop competing with it and collaborate instead.
This alluring narrative plays well with investors and the media, and in July Microsoft injected the lab with a fresh $1 billion.
That structure change happened in March 2019. OpenAI shed its purely nonprofit status by setting up a “capped profit” arm, a for-profit with a 100-fold limit on investors’ returns, albeit overseen by a board that’s part of a nonprofit entity.
Shortly after, it announced Microsoft’s billion-dollar investment (though it didn’t reveal that this was split between cash and credits to Azure, Microsoft’s cloud computing platform).”
Valuing start-ups is already immensely difficult, especially a technology start-up lacking sales, growth projections, and a clear consumer base.
Typical fundamental analysis using the income approach, industry peers, weighted-average cost of capital, and pro forma financials will ABSOLUTELY not work!
Do you use market multiples or precedent transactions? Who knows, that’s ultimately for you to decide as the business appraiser.
Artificial intelligence and machine learning is a new innovation (less than a decade old). However, based on the $1 billion Microsoft bet (and 50 million shares outstanding) a $20 share price would appear appropriate.
The narrative behind OpenAI could certainly sent the stock price surging much higher due to the publicity and clout of Elon. He is the world’s most famous (and popular) CEO.
OpenAI Stock Alternatives
Got it, artificial intelligence and machine learning isn’t your investing expertise. Remember, Warren Buffett says never invest in a company you do not understand.
What are some other possible upcoming tech IPOs?
Can You Buy Stock in OpenAI?
At the moment, no, you cannot buy stock in OpenAI, but you will be able to purchase shares in an upcoming IPO. OpenAI’s valuation points towards a $20 share price.
OpenAI, in my opinion, is going to be a market driver in technological progress and creating sustainable wealth. Keep your eyes out for public financials, tweets from Elon, or S-1 filings!
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