Buy Hold Rant
OpenAI Just Became a For-Profit Company. Is This the Start of an AI Bubble?
10/30/2025, 5:33:32 PM
Economic Summary
- OpenAI converted to a for-profit public benefit corporation while keeping a nonprofit arm that will own roughly 26%, effectively creating a huge nonprofit stake valued at about $120+ billion (OPENAI). This structure may allow selling equity over time to fund public-benefit spending.
- Microsoft owns approximately 27% of OpenAI, a stake valued around $130 billion at the last valuation, which pushed MSFT shares higher and gives Microsoft significant exposure to AI upside (MSFT).
- OpenAI is projected to run at about $12–13 billion of revenue this year with very high growth (roughly 300% annualized), and reportedly over ~800 million daily active users, supporting very large forward valuations (OPENAI).
- OpenAI and partners reportedly have roughly $800 billion of multi-year purchase or usage commitments with vendors like NVIDIA, AMD, Oracle, Broadcom, and Microsoft (NVDA, AMD, ORCL, AVGO, MSFT), raising questions about feasibility and whether commitments are contractual or discretionary.
- There is debate over whether current AI enthusiasm constitutes a bubble; unlike many .com-era firms, many AI companies already generate revenue, but rapid spending and lofty valuations could still prompt market re-pricing.
Bullish
- OpenAI's huge user base and revenue growth support very large valuations.
- Microsoft's 27% stake gives it exposure to potential massive upside from OpenAI.
- Public benefit corporate structure and retained nonprofit stake may preserve mission and broaden access.
Bearish
- OpenAI's conversion and massive vendor commitments (~$800B) may be unsustainable and risk a market correction.
- If spending commitments are contractual, partner companies (e.g., NVDA, ORCL, AMD, AVGO) could face revenue shortfalls.
- Microsoft's benefit from OpenAI was largely priced in, reducing upside for new MSFT investors.
- The rapid hype around AI raises bubble concerns, even if fundamentals differ from the .com era.
Bullish tickers
OPENAIMSFTNVDA
Bearish tickers
OPENAINVDAORCLAMDAVGOMSFT
OPENAI
Bullish
Very strong growth (~$12–13B run-rate, millions of users) and potential to reach extremely large valuations; public benefit charter preserves access.
Bearish
Large multi-year vendor commitments (~$800B) may be unsustainable; conversion to for-profit raises concerns about precedent and commercialization.
MSFT
Bullish
Owning ~27% of OpenAI gives Microsoft significant upside if OpenAI becomes a trillion-dollar company.
Bearish
Microsoft's OpenAI exposure was largely priced in, limiting further upside for new MSFT investors.
NVDA
Bullish
As a core AI hardware provider, NVDA stands to benefit from increased OpenAI demand.
Bearish
Heavy vendor commitments tied to OpenAI could prove overstated or contractual, risking revenue forecast misses.
AMD
Bullish
AMD may gain from increased AI infrastructure spending if commitments materialize.
Bearish
Large expected spending tied to OpenAI may be contingent and could disappoint if commitments falter.
ORCL
Bullish
Could benefit significantly from enterprise demand if OpenAI and customers scale usage on Oracle infrastructure.
Bearish
Reported large commitments (e.g., ~$300B) may be aspirational rather than contractual, raising execution risk.
AVGO
Bullish
Stands to gain from infrastructure and component demand tied to AI expansion.
Bearish
Broadcom exposure to OpenAI-related commitments may not translate into realized revenue if deals are non-binding.
People mentioned
JackAdrian