OpenAI’s Wild, Wild $850 Billion Valuation

By Douglas A. McIntyre Published Dec 19, 9:15AM EST

24/7 Wall St. Key Points

OpenAI aims to raise up to $100 billion, which could set its valuation at $850 billion.
That is a massive amount for an unprofitable company that faces a bevy of new challenges.

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

OpenAI’s Wild, Wild $850 Billion Valuation — © Deagreez / Getty Images

OpenAI will cobble together a clutch of investors to raise as much as $100 billion. Some of that money may come from sovereign wealth funds, which could include one run by the United Arab Emirates. The deal could set OpenAI’s valuation at $850 billion, a massive amount for a company that says it will not be profitable until 2030. OpenAI will also need as much as hundreds of billions of dollars to build data centers, and probably will need more financing to handle this infrastructure.

OpenAI has several disadvantages that it did not have just a month or two ago. One is that Alphabet’s new Gemini 3 and Gemini 3 Flash do better based on many metrics than OpenAI’s 5.2 release. Engadget writes “Google’s Gemini 3 Flash model outperforms GPT-5.2 in some benchmarks.” This does not account for the constant advances of products from Microsoft, Perplexity, or xAI, which are each investing billions of dollars to try and jump to the head of the line of “best AI” products.

Another argument about AI products is that they all will eventually do the same things well, mostly for free. It becomes an arms race that ends up in a stalemate.

Another challenge to the valuation of these companies and their products is their reliance on electricity, which became widely used in America a century ago. Put simply, there is not enough of it today. AI data centers are the most electricity-hungry projects in history, while parts of the U.S. electric grid are decades old. Electricity generation relies on a fragile combination of coal, natural gas, and wind, hydro, and solar power.

In addition, there is the politics of electricity. The more data centers that are built, the more electricity prices are likely to rise. This has led it to become part of the political platforms of people running for local and national office.

Not every part of the United States wants data centers in its backyard. People are worried about pollution and their electricity bills.

If parts of the U.S. run low on electricity, data center proliferation could slow.

Maybe there is an AI valuation bubble, and maybe not. Nvidia supplies arms to almost every AI combatant. Its remarkably high valuation may be safe. As for OpenAI, competition, massive financial losses, and limits to data center growth make one of the industry’s greatest gambles.

China Prepares to Wreck the U.S. AI Industry

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.