Dozens of Cali-based tech companies have proven to be incredible investment opportunities over the past few decades, and OpenAI might soon join this illustrious list. Thanks to the success of ChatGPT — plus a high-profile partnership with Microsoft — OpenAI has had no shortage of press in the financial sphere, and some reports suggest it already has an $80 billion valuation. Understandably, since OpenAI is at the epicentre of generative AI, more UK investors are curious about ways to add shares of this company to their portfolios.
Can You Buy Open AI Stock?
Spoiler alert: There isn’t a way to buy OpenAI directly because it’s a private company. However, there are ways you can get exposure to all the innovations happening at OpenAI through various investment platforms.
What is Open AI?
I’ve been fascinated by OpenAI since learning about their groundbreaking work in artificial intelligence. Founded in 2015, OpenAI is a non-profit organization with a mission to develop AI that benefits all of humanity.
What’s really caught my attention is how OpenAI has consistently pushed the boundaries of AI capabilities. Their GPT (Generative Pre-trained Transformer) language models, especially GPT-3, have shown remarkable prowess in natural language processing. GPT-3 could engage in human-like conversations, answer questions, and even produce creative writing. Since its release, it has been used for everything from crafting poetry to generating functional code.
OpenAI’s portfolio extends beyond language models. Their DALL-E system can create unique images from text descriptions, while their Codex model can translate natural language into working computer code. The potential applications for these technologies are vast and exciting.
In 2019, OpenAI made an interesting shift to a “capped-profit” model to attract more investment while maintaining their core mission. They created a for-profit subsidiary, OpenAI LP, while keeping the parent company as a non-profit. This unique structure aims to balance the need for resources with their commitment to benefiting humanity.
One of OpenAI’s most significant partnerships is with Microsoft, which invested $1 billion in 2019 and secured exclusive rights to some of OpenAI’s technology. This collaboration has led to integrations of OpenAI’s tech into various Microsoft products.
For those of us interested in investing in AI, it’s worth noting that OpenAI itself isn’t publicly traded. However, there are ways to gain exposure to similar AI technologies through publicly traded companies like Microsoft, Google (Alphabet), and NVIDIA, which are all heavily involved in AI research and development.
I’m continually amazed by OpenAI’s role in advancing AI technology. Their work raises intriguing questions about the future of AI and its potential impact on our society. As someone keenly interested in both technology and investing, I find OpenAI a compelling company to watch and learn from.
How Can UK Investors Buy OpenAI Stock?
Investing in OpenAI isn’t as simple as signing up with a UK broker and placing an order. Since its start in 2015, OpenAI’s team wanted to ensure it always had a say in the company’s direction, so they created a dual business with for-profit and nonprofit segments.
While it’s possible to buy shares in the for-profit part of OpenAI’s business, it’s tricky unless you have serious connections in the tech space. True, some pre-IPO platforms allow investors to buy shares in private companies, but these sites tend to have high minimum capital requirements and extensive background checks for investors. Also, since these shares aren’t on a public market, trades take place off any public record, making it tricky to establish a transparent trading price or find willing counterparties when you want to trade.
Unless OpenAI announces plans to go IPO, most UK investors can’t directly buy a stake in this company. But don’t fret! Even though this company is private, there are many ways to get involved with OpenAI.
Who Is OpenAI Owned By?
OpenAI’s initial £1 billion funding round in 2015 brought together some heavyweight names. The usual suspects Peter Thiel, Elon Musk, and Reid Hoffman were among the individual backers. On the corporate side, we saw Infosys and Amazon Web Services jumping in.
Key investors in OpenAI’s development
Microsoft is a major shareholder, owning 49% of OpenAI. Their £1 billion investment in 2019 was a game-changer, giving them certain rights to OpenAI’s groundbreaking technology. Other big names in the mix include venture capital firms like Tiger Global, Sequoia Capital, and Andreessen Horowitz. They collectively poured £300 million into OpenAI in April 2023.
Company structure
In 2018, OpenAI created a ‘capped-profit’ arm called OpenAI LP. This clever setup allows for profit generation but with strict limits. Any excess profits go back into research rather than shareholders’ pockets.
OpenAI’s structure is quite clever. OpenAI Inc. acts as the non-profit umbrella, while OpenAI LP handles the commercial side of things. It’s a refreshing balance between pursuing profit and maintaining their original mission.
Drama & controversies
The OpenAI boardroom has seen its share of excitement. In February 2024, Elon Musk, a co-founder who left in 2018, sued OpenAI. He claims they’ve strayed from their original mission of benefiting humanity. OpenAI countered, saying Musk wanted “absolute control” back in 2017.
Then there was the brief departure of CEO Sam Altman in November 2023. It was a whirlwind few days that saw Altman fired, hired by Microsoft, and then rehired by OpenAI – all in less than a week!
Key Personnel
The nonprofit arm recently expanded its board from three to six members, bringing in some heavy hitters from the tech and business worlds.
At the helm is Chairman Bret Taylor, who’s got an incredible track record with companies like Shopify, Salesforce, and Meta. His experience should prove invaluable in guiding OpenAI’s strategic direction.
I’m particularly intrigued by Larry Summers’s addition. As a former US Treasury Secretary and president emeritus of Harvard, he brings a unique blend of economic and academic expertise to the table. I reckon his insights will be crucial as OpenAI navigates the complex intersection of AI and global economics.
Adam D’Angelo is another fascinating board member. As the co-founder of Quora and former CTO of Facebook, he’s got deep roots in the social media and knowledge-sharing space. I’m keen to see how his background might influence OpenAI’s approach to information dissemination and user engagement.
The board’s also got some serious firepower in the healthcare and biotech arena with Dr. Sue Desmond-Hellmann. Her experience at the Gates Foundation and Genentech could be instrumental in exploring AI applications in medicine and global health.
Nicole Seligman and Fidji Simo round out the board, bringing legal acumen and expertise in consumer tech respectively. Seligman’s background with Sony and Simo’s current role as CEO of Instacart add valuable perspectives from different sectors of the tech industry.
It’s worth noting that OpenAI maintains a policy where the majority of board members must have no ownership stake in the company. This setup aims to ensure decisions are made with the organisation’s mission in mind, rather than personal financial gain.
The Appeal of Investing in AI-Focused Companies
The potential for AI to transform industries and create value is truly staggering, and it’s no wonder that many investors are keen to get a piece of the action.
The AI Market’s Explosive Growth
One of the most compelling reasons to consider AI investments is the sheer scale of the market’s growth. According to a report by Grand View Research, the global AI market size was valued at $136.55 billion in 2022 and is expected to expand at a compound annual growth rate (CAGR) of 37.3% from 2023 to 2030. These figures are mind-boggling and suggest that we’re only at the beginning of the AI revolution.
Diverse Applications Across Industries
What I find particularly fascinating about AI is its versatility. It’s not just about chatbots or virtual assistants; AI is making waves in countless sectors:
Healthcare: AI is being used to analyse medical images, predict patient outcomes, and even assist in drug discovery.
Finance: From fraud detection to algorithmic trading, AI is reshaping the financial landscape. Many investment platforms now offer AI-assisted tools to help investors make better investment decisions.
Manufacturing: AI-powered robotics and predictive maintenance are boosting efficiency and reducing downtime.
Retail: Personalised recommendations and inventory management are just a couple of ways AI is transforming shopping experiences.
This diversity means that investors have a wide array of options when it comes to AI-focused companies, from specialised AI firms to established tech giants incorporating AI into their offerings.
The Potential for Disruptive Innovation
One of the most exciting aspects of investing in AI is the potential for groundbreaking innovations. Take, for example, DeepMind’s AlphaFold, which has revolutionised protein structure prediction. This breakthrough could have far-reaching implications for drug discovery and our understanding of diseases. As an investor, the idea of backing companies that could produce such game-changing technologies is incredibly appealing.
Challenges and Considerations
Of course, it’s important to approach AI investments with a balanced perspective. The field is highly competitive, and not every AI startup will succeed. There are also ethical considerations and regulatory challenges that could impact the development and adoption of AI technologies.
Moreover, valuations for some AI companies have soared, potentially leading to concerns about a bubble. It’s crucial to do thorough research and consider factors like a company’s financial health, competitive position, and long-term strategy.
My Takeaway
Despite the challenges, the appeal of investing in AI-focused companies is strong. The potential for significant returns and the opportunity to be part of a technological revolution is hard to ignore. As with any investment, diversification is key, and it might be worth considering a mix of established tech companies with strong AI initiatives and promising AI-focused startups.
As I continue to explore this fascinating sector, I’m reminded of a quote from Google CEO Sundar Pichai: “AI is probably the most important thing humanity has ever worked on.” With that in mind, it’s no wonder that investors are eager to be part of this transformative journey.
Alternative Ways To Invest In OpenAI
If you’re super bullish on OpenAI’s potential and want price exposure in your portfolio, there are some easy ways to get involved with OpenAI’s initiatives. While you can’t become an OpenAI shareholder, you’ll find plenty of opportunities on the stock market to get close to this AI superstar.
Invest in Publicly-Traded OpenAI Partners
A simple strategy to get exposure to OpenAI is to buy shares in companies with a vested interest in its success. Unquestionably, Microsoft is the most prominent example in this category, given the Big Tech titan’s nearly 50% ownership stake in OpenAI. As one of the largest tech companies in the world, Microsoft is also an actively traded stock on many UK trading platforms, so it’s easy to add shares of this company to your brokerage account.
Just keep in mind that you aren’t getting concentrated exposure to OpenAI’s projects by buying Microsoft shares. Instead, OpenAI is one part of Microsoft’s multi-faceted business, which may or may not be to your liking. While buying Microsoft shares gives you greater diversity thanks to the company’s other business divisions (e.g., video games, personal computing, and cloud storage), you may feel more comfortable with a pure-play in the AI space. All that being said, buying Microsoft shares is the most direct way to get a piece of OpenAI’s business in your account.
The GPU chipmaker Nvidia is another AI company with close ties to OpenAI’s prospects. While not as intertwined as Microsoft, Nvidia has become a leader in the AI revolution thanks to its proprietary hardware. Like Microsoft, Nvidia often ranks as one of the largest companies on the planet, meaning it has exceptionally liquid trading on UK investing platforms.
It also helps to stay updated on the latest news and updates from OpenAI to see if there are any recent partnerships with other businesses. For example, public companies like Apple and Reddit announced that they would integrate OpenAI into their strategies, which gives stockholders indirect exposure to OpenAI. Be sure to follow OpenAI’s social media feeds and official blog for details on new partnerships or acquisitions and new ideas on how to get involved with this company.
Look Into AI-Focused Funds
If you don’t want to tie your money to a specific company — or if you’re not a fan of stock picking — there are several exchange-traded funds (ETFs) and mutual funds that give you broad exposure to the AI sector. Again, these funds won’t give you OpenAI shares, but they often include plenty of big companies with a relationship with OpenAI. Plus, since these funds focus on innovations in the AI sector, they should perform similarly to OpenAI.
For example, Blackrock’s iShares Robotics and Artificial Intelligence Multisector ETF (IRBO) focuses on investing in companies with heavy exposure to these emerging fields, including heavyweights like Arm Holdings and Adobe. You could also consider investing in funds focused more broadly on the technology sector like the Invesco QQQ Trust (QQQ) or the ARK Innovation ETF (ARKK).
Whether you choose a fund with a narrow or broad focus, you’ll enjoy better diversity holding these shares versus equity in a single company. However, remember that funds have management fees, so be sure to review the average expense ratios before pulling the trigger.
Most Promising AI Companies
The AI boom has really shaken up the market, with some stocks soaring to new heights.
What’s caught my attention is that despite the general excitement, there are still some promising AI players that seem undervalued. Snowflake, Cognizant Technology Solutions, and Salesforce are all trading below what Morningstar analysts reckon they’re worth. It’s got me thinking about the potential opportunities here.
Of course, we can’t talk about AI stocks without mentioning the big names. Nvidia and Microsoft are right at the heart of this AI revolution. They’re trading at what analysts consider fair value, but their influence on the sector is undeniable.
The AI Investment Landscape
When I look at how to invest in AI, I’m struck by the variety of options. It’s not just about the companies developing AI itself. There’s a whole ecosystem of firms involved in everything from semiconductors to data infrastructure. For instance, Taiwan Semiconductor Manufacturing is crucial in chip production, while Arista Networks is making waves in data centre infrastructure.
The numbers really tell the story of this AI boom. The Morningstar Global Next Generation Artificial Intelligence Index has shot up by 64.7% this year, compared to the broader market’s 18.4% gain. It’s a stark illustration of just how much investor interest there is in AI.
Out of 49 stocks in this AI index, 38 are covered by Morningstar analysts. Some, like Broadcom and Palantir Technologies, have seen incredible rallies this year. Broadcom’s up 77%, but Palantir’s 211% rise really catches the eye.
Snowflake
Looking at specific companies, Snowflake stands out to me. It’s trading at a 38% discount to its estimated fair value. What I find compelling about Snowflake is its approach to handling data in the cloud era. They’re tackling some real challenges in data management that are crucial for AI development.
Cognizant
Cognizant is another interesting case. They’re not just implementing AI solutions for other companies; they’ve got their own AI offering called Neuro AI. It’s a good reminder that the IT services sector could be a less obvious beneficiary of the AI boom.
Salesforce
Salesforce’s AI strategy is intriguing too. They’ve been in the AI game for a while with their Einstein platform, which is making a staggering 194 billion predictions every day. That’s more than 20 times the number of daily Google searches!
Nvidia
As for Nvidia, their dominance in GPUs and AI-related hardware and software is hard to ignore. Their CUDA platform has become a crucial tool for AI developers, giving them a real edge in the market.
Microsoft
Microsoft’s Azure cloud platform is another key player in the AI landscape. It’s fascinating to see how they’re leveraging their existing customer base to push AI adoption. Their partnership with OpenAI has really put them at the forefront of AI development.
The AI market is moving at breakneck speed, and it’s thrilling to watch. While some stocks might seem pricey, there could still be hidden gems waiting to be discovered. I’m keeping my eyes peeled for the next big AI breakthrough and the companies that might benefit from it.
5 ETFs With Exposure to AI
Like many investors, I’ve wondered about how to gain exposure to innovative companies like OpenAI. While we can’t directly invest in OpenAI since it’s privately held, there are some intriguing ETF options that offer exposure to the broader AI industry.
Global X Robotics & Artificial Intelligence ETF (BOTZ)
One that caught my eye is the Global X Robotics & Artificial Intelligence ETF (BOTZ). This fund invests in companies developing AI and robotics technologies. As of August 2023, it had over $2 billion in assets under management. Some of its top holdings include:
NVIDIA Corp (NVDA): A leading designer of graphics processing units (GPUs) that are crucial for AI and machine learning applications. They’re at the forefront of developing hardware that powers everything from autonomous vehicles to deep learning systems.
ABB Ltd (ABBN SW): A Swiss-Swedish multinational corporation specialising in robotics, power, and automation technology. They develop industrial robots, automated manufacturing systems, and electric vehicle charging infrastructure.
Intuitive Surgical Inc (ISRG): Pioneers in robotic-assisted, minimally invasive surgery. Their da Vinci Surgical System allows doctors to perform complex procedures with enhanced precision and control.
Keyence Corp (6861 JP): A Japanese company that develops and manufactures automation sensors, vision systems, barcode readers, and other industrial automation products. Their technologies are essential for factory automation and quality control.
SMC Corp (6273 JP): A Japanese manufacturer of pneumatic components for industrial automation. They produce a wide range of products, including air cylinders, valves, and air preparation equipment that are crucial in many automated manufacturing processes.
These companies represent a diverse range of technologies within the robotics and AI space, from hardware that powers AI systems to practical applications in surgery and industrial automation.
QTUM ETF: A Quantum Computing and AI Investment Opportunity
The Defiance Quantum ETF (NYSE: QTUM) is an exchange-traded fund that offers investors exposure to companies involved in quantum computing and artificial intelligence technologies. Launched in 2018, QTUM aims to track the BlueStar Quantum Computing and Machine Learning Index.
QTUM invests in companies developing or using quantum computing, machine learning, and other innovative technologies. The fund holds a variety of companies across different market capitalisations and countries, providing broad exposure to the quantum computing and AI sectors. As of 2023, QTUM has an expense ratio of 0.40%, which is relatively competitive for a thematic ETF. The index is rebalanced semi-annually to stay current with the rapidly evolving quantum computing and AI landscapes.
ROBO Global Robotics & Automation Index ETF (ROBO)
Another interesting option is the ROBO Global Robotics & Automation Index ETF (ROBO). This ETF, launched in 2013, aims to track the ROBO Global Robotics & Automation Index. It’s designed to expose investors to companies at the forefront of robotics, automation, and artificial intelligence (AI) technologies.
This fund casts a wider net, investing in automation and robotics companies globally. The fund is quite diverse, with over 80 holdings spanning various sectors and countries. What I find particularly interesting is that it includes both established industry giants and smaller, innovative companies that might be flying under the radar. That makes it more diversified than some other AI ETFs, with no single holding making up more than 2% of the fund.
Roundhill Generative AI & Technology ETF (CHAT)
For those interested in generative AI specifically, there’s the Roundhill Generative AI & Technology ETF (CHAT). Launched in 2023, it focuses on companies involved in large language models and other generative AI technologies. While it’s a newer and smaller fund, it provides targeted exposure to this rapidly growing area.
iShares Exponential Technologies ETF (XT)
The iShares Exponential Technologies ETF (XT) takes a broader approach, investing in various emerging technologies including AI, robotics, and nanotechnology. With a lower expense ratio of 0.46%, it could be an economical way to gain exposure to multiple cutting-edge fields.
First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT)
Lastly, the First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT) offers a mix of domestic and international exposure. About 57% of its holdings are U.S. companies, with the rest spread across countries like Japan, France, and the UK.
It’s worth noting that while these ETFs offer exposure to AI, they each have different approaches and holdings. I’d recommend digging into the specifics of each fund’s strategy and holdings before investing. And of course, it’s always wise to consider how any investment fits into your overall portfolio and financial goals.
As AI continues to advance, I’m excited to see how these ETFs evolve and what new investment opportunities might emerge in the future. Who knows – maybe one day we’ll even see OpenAI itself go public!
When Will OpenAI Go IPO?
There’s no official word from OpenAI when or whether it plans to issue shares for retail traders, but recent interviews from company executives suggest it won’t be anytime soon. For example, in a 2023 interview, OpenAI’s CEO Sam Altman said he wasn’t keen on bringing OpenAI to the public market due to its unique business structure. Specifically, Altman expressed fears of legal repercussions due to the nonprofit and for-profit parts of OpenAI’s business model.
Plus, considering the financial support from private equity firms and companies like Microsoft, it’s unlikely that OpenAI will need to raise funds in the public market. Unless OpenAI needs extra liquidity or transforms into a completely for-profit business, it’s unlikely to see a scenario where this company goes IPO.
“Open” Your Mind To Other AI Possibilities
If you’re a fan of OpenAI’s services like ChatGPT or DALL-E, it’s easy to understand why you’d want to own a slice of this groundbreaking company. Unfortunately, global retail investors still can’t get their hands on shares of the privately managed OpenAI. However, there are plenty of other ways to get exposure to the AI sector through ETFs, mutual funds, and solo stocks in this hi-tech field. Some companies like Microsoft have a close relationship with OpenAI, which gives you more ways to bet on OpenAI’s success.
Take some time to research tickers in the AI sector and watch OpenAI’s socials to figure out more alternative ways to own a peripheral piece of AI history.
Frequently Asked Questions
Can I buy shares in OpenAI?
You can’t buy shares in OpenAI directly as it’s not a publicly traded company. It’s a privately held organisation with a unique structure – part non-profit, part for-profit. However, if you’re keen on getting exposure to OpenAI’s technology, you might consider investing in Microsoft.
They’ve invested heavily in OpenAI and are integrating their tech into various products. It’s an indirect way to potentially benefit from OpenAI’s innovations. Keep an eye on OpenAI’s future plans, though. The AI landscape is evolving rapidly, and things could change!
How to invest in AI in the UK?
You can buy shares in AI-focused companies listed on the London Stock Exchange, like Blue Prism or Darktrace. Another approach is investing in global AI giants through UK brokers – think Nvidia or Microsoft. For a diversified approach, consider AI-themed ETFs available on UK platforms, such as the L&G Artificial Intelligence UCITS ETF.
Don’t forget about UK-based investment trusts with AI exposure, like Scottish Mortgage Investment Trust. Always do your research and consider your risk tolerance. The AI sector is dynamic, offering potential growth but also volatility.
How much does OpenAI stock cost?
OpenAI isn’t publicly traded, so there’s no stock price available. It’s a private company with a unique structure – part non-profit, part for-profit. While we can’t buy shares directly, OpenAI’s estimated value was around $29 billion in early 2023, according to TechCrunch.
Is OpenAI planning to go public?
From what I’ve gathered, OpenAI doesn’t have any immediate plans to go public. Their CEO, Sam Altman, stated in June 2023 that they’re not considering an IPO. The company’s unique structure – a non-profit with a for-profit subsidiary – complicates matters. They seem focused on their mission rather than going public.
However, the AI landscape is rapidly evolving. Microsoft’s $10 billion investment in OpenAI earlier this year shows there’s massive interest in the company. While an IPO isn’t on the cards now, I’ll be keeping a close eye on any changes. The future of AI is full of surprises!
