OpenAI has filed confidentially for an initial public offering, marking a pivotal moment for the AI industry as the ChatGPT maker joins rival Anthropic in a high-stakes race to go public. The filing, announced on Monday, comes just over a week after Anthropic submitted its own IPO paperwork, setting up what could be one of the most significant tech debuts in a generation.

The timing is remarkable. OpenAI was last valued at $852 billion post-money, making it one of the most valuable private companies in the world. Yet the company faces a paradox that has caught the attention of Wall Street analysts and industry observers: it's racing toward public markets while simultaneously missing key financial targets and burning through cash at an unprecedented rate.

Why Is OpenAI Going Public Now If It's Missing Revenue Targets?

The answer lies in the brutal economics of training large language models (LLMs), which are AI systems trained on vast amounts of text data to understand and generate human language. OpenAI's chief financial officer, Sarah Friar, has reportedly raised internal concerns about whether the company can sustain its massive data center spending. According to recent reporting, OpenAI expects to spend roughly $122 billion on computing power for AI research alone in 2028, and projects burning $85 billion that year even after doubling sales from the prior year.

To put this in perspective, the company is asking public market investors to buy into a business that, by its own internal projections, won't generate more cash than it spends for at least four more years. This is a stark contrast to Anthropic, which has painted a rosier financial picture, claiming it is close to achieving its first quarterly profit.

The IPO filing allows OpenAI to begin preparing for a public offering without immediately disclosing detailed financial information or business risks. This confidential approach gives the company breathing room to negotiate terms before facing full public scrutiny. However, secondary markets provide a window into investor sentiment. On retail trading platforms like Forge Global, Anthropic recently surged to a $1 trillion valuation, surpassing OpenAI's recorded value of around $880 billion in April.

What Does the IPO Race Mean for the AI Industry?

The competition between OpenAI and Anthropic to reach public markets first carries real consequences. Experts say whoever debuts first will likely capture more of the increasingly scarce capital flowing to AI companies. Adding to the pressure, SpaceX is expected to go public at a $1.75 trillion valuation, potentially draining investor appetite before either AI company gets its turn.

David Shapiro, founder and CEO of OpenVC, which oversees the NYSE OpenVC 500 Index tracking the largest public and private companies in the U.S., noted that Anthropic's rate of appreciation far exceeds OpenAI's this year. Anthropic has appreciated 123 percent year-to-date, while OpenAI has grown 11.3 percent. However, Shapiro emphasized that OpenAI remains a strong investment prospect.

"From a secondary investor standpoint, OpenAI had already grown into a significant portion of its valuation. We haven't seen OpenAI crater or anything close, and valuation is still enormously successful, according to the index," said David Shapiro, founder and CEO of OpenVC.

David Shapiro, Founder and CEO of OpenVC

Shapiro added that OpenAI's stock in the secondary market "experienced a slight pop over the last few days, indicating investors may be pricing both as the 'dual winners' of the broader LLM race".

Shapiro

How Will OpenAI's IPO Filing Affect Its Competitive Position?

The filing order matters more than many realize. Anthropic's IPO disclosures will set a valuation benchmark that constrains how OpenAI can price its own offering. According to a recent PitchBook report, OpenAI is viewed as overvalued relative to its fundamentals, which could complicate its public debut.

Despite these financial headwinds, OpenAI maintains significant competitive advantages:

• Consumer Scale: OpenAI has built real scale with around 900 million weekly active users of ChatGPT, giving it unmatched reach in the consumer AI market.
• Product Ecosystem: The company has expanded beyond ChatGPT to include enterprise and government solutions, diversifying its revenue streams beyond consumer subscriptions.
• Brand Recognition: OpenAI disrupted the AI world when it released ChatGPT in 2022, sparking a wave of large language model advancements across the industry and cementing its position as an innovation leader.

OpenAI was founded in 2015 as a nonprofit research lab before transitioning to a for-profit structure. The company has weathered significant internal turbulence, including a 2022 board coup that temporarily ousted CEO Sam Altman over concerns about transparency and adherence to the company's mission of benefitting all humanity. Altman was quickly reinstated, and those involved in the coup, including co-founder Ilya Sutskever, departed.

More recently, OpenAI has faced mounting legal challenges. The state of Florida sued the company and Altman, accusing them of harming children by providing information to school shooters, offering guidance on self-harm, and addicting young users. This lawsuit adds to a growing list of legal actions against OpenAI and other chatbot makers following reports of user delusions, self-harm, suicide, and mass casualty events.

The IPO filing represents a critical juncture for OpenAI. The company must convince public market investors that its path to profitability is credible, despite current financial projections showing years of losses ahead. Whether the market will embrace an AI company burning billions annually remains one of the most pressing questions facing the tech industry in 2026.