OpenAI has now joined AI rivals Anthropic and SpaceX in filing for an IPO to tap public markets to pursue ambitious plans, but the real challenges will start after the cash is raised, warns the CEO of global financial advisory giant deVere Group.
The warning comes as OpenAI confidentially filed paperwork for a US stock market listing, following a similar move by Anthropic just days earlier, while SpaceX is also pushing ahead with what could become one of the largest IPOs in history, seeking a valuation of $1.78 trillion.
The trio sit at the centre of the AI and tech investment boom that has helped propel global equity markets to record highs.
Nigel Green says: “These listings are being treated as a coronation for the AI era.
“Investors see OpenAI, Anthropic and SpaceX as companies shaping the future, and there’s no question that demand for their shares is likely to be intense. I think they’ll raise their cash.
“Successful fundraising would send a powerful signal.
“It would validate private-market valuations, encourage more high-profile companies to come to market and reinforce belief in the AI and tech investment story that has been one of the dominant forces behind stock market gains.
“But raising the money is, typically, the easiest part.
“The real test begins on day one of life as a public company.”
The deVere CEO notes that investor enthusiasm surrounding AI remains extraordinary.
OpenAI is reportedly targeting a valuation approaching $1 trillion after becoming one of the fastest-growing companies in history, with hundreds of millions of users and billions in annualised revenue.
Anthropic has also surged towards $1 trillion valuation territory amid explosive demand for enterprise AI products.
Nigel Green says: “Private investors can back a vision and wait years for results. Public markets rarely offer that luxury.
“Once listed, every quarter becomes an examination. Investors want evidence. They want growth, margins, execution and progress.
“Expectations that seem manageable in private markets can become relentless under the glare of public ownership.
“Markets quickly move from asking what a company could become to asking what it delivered in the last three months.”
History, he argues, contains a lesson many investors ignore during periods of excitement.
“Some of the most celebrated IPOs of the modern era suffered sharp falls after going public. Initial euphoria can fade remarkably quickly.
“Companies often discover that maintaining investor confidence is harder than generating it.
“Public shareholders are less patient than venture capital firms. Miss a target and the reaction can be immediate; or delay a product launch and questions start flying; or increase spending and investors will want to know exactly when they will see returns.”
The challenge may be particularly acute for AI companies because the capital demands remain enormous.
“These businesses are competing in an arms race that requires staggering investment in infrastructure, computing power, talent and energy,” notes the deVere CEO.
“Investors understand the opportunity. What they will increasingly scrutinise is the route to sustainable profitability.
“Revenue growth alone will not be enough forever. Markets will want to know who can convert technological leadership into durable earnings.”
He believes another factor will be competition itself.
Nigel Green says: “For several years investors have largely focused on the size of the opportunity. The next phase will involve closer examination of competitive positioning.
“OpenAI, Anthropic, SpaceX, established tech giants and emerging challengers are all competing for talent, customers, infrastructure and capital.
“The winners will not necessarily be those attracting the biggest headlines today. They will be the companies proving they can execute consistently over many years.”
The success or failure of these landmark flotations will have consequences far beyond the companies themselves.
He says: “These IPOs are becoming a referendum on investor appetite for ambitious, long-duration growth stories.
“If they perform strongly, confidence across the AI sector is likely to strengthen further.
“If they disappoint, sentiment can cool rapidly and valuations across the industry could come under pressure.
“Investors should remember that innovation and investment returns are not always the same thing. A company can transform the world and still face periods of intense pressure in public markets.”
Nigel Green concludes: “OpenAI, Anthropic and SpaceX are pursuing goals that could reshape industries and economies.
“But the fundraising through these mega IPOs is only the opening chapter.
“Public markets reward ambition, but they also demand continual proof.”
