To The Moon

Nvidia Corp (NASDAQ:NVDA) stock is trading higher Wednesday, buoyed by the continued artificial intelligence frenzy evident via its collaborations with Getty Images Holdings, Inc (NYSE:GETY) and Cloudflare, Inc (NYSE:NET).

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The uptrend continues

Nvidia is another major beneficiary of the AI fever because demand for its chips is expected to shoot up as artificial intelligence is used more widely. While the company posted $27 billion of revenue in the fiscal year that ended in January, it is on track to double that number for the current year.

Nvidia stock more than doubled this year on excitement over that growth. Its market valuation is currently at about $1 trillion, which means investors are paying $19 for each dollar of revenue they expect the firm to generate in 2023.

Buy call 

Buy call

OpenAI's valuation could rise threefold to somewhere between $80 billion and $90 billion, making the artificial-intelligence start-up behind ChatGPT more expensive than publicly traded AI plays such as Microsoft, Alphabet, and Nvidia by at least one measure.

The Wall Street Journal reported on Tuesday that OpenAI is in talks with investors about a potential sale of shares at that valuation that would allow employees to cash in by selling their stock to external investors. In the past, venture firms have purchased OpenAI shares through tender offers.

The company has told investors that it expects to reach $1 billion in revenue this year and generate many billions more in 2024, according to the Journal report, which cited people familiar with the discussion.

While the basic version of OpenAI's ChatGPT is free, the company has been charging individuals for access to more advanced and powerful features. Companies that want to license and use OpenAI's large language models in their products are paying up as well.

Holding and not for sale just yet!

A valuation of $90 billion means investors would be paying $90 for each dollar of revenue generated this year. That would put the start-up ahead of some of the most expensive tech companies on the public market.

OpenAI, which just started generating significant revenue after the release of ChatGPT in November, is most likely not profitable yet. Given how little revenue it has now, a valuation of $80 billion to $90 billion would say a lot about investors' bullishness regarding AI.

The employee share sale could set a base price for any additional fundraising through new stock issuance, which is widely expected. Retail investors that want to bet their money on the AI company might be disappointed, though.

Chief Executive Sam Altman has said he doesn't plan for OpenAI to go public soon or sell the firm to a buyer. "When we develop super intelligence, we are likely to make some decisions that most investors would look at very strangely," Altman said at a conference in June.

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