Is Microsoft's stake in the ChatGPT developer, OpenAI, potentially worth $100 billion? According to Oppenheimer analyst Timothy Horan, the value of Microsoft's OpenAI investment may be vastly underestimated based on current fundraising rounds for AI start-ups.
For instance, Anthropic, an AI start-up backed by Amazon.com, is reportedly seeking further investment with a valuation between $20 billion and $30 billion. With an annualized revenue rate of approximately $100 million, this valuation implies that Anthropic is valued at 200 to 300 times its sales.
Using the lower end of this range as a basis, a similar calculation for OpenAI would suggest a valuation of around $200 billion. Consequently, Microsoft's 49% stake in OpenAI would be worth almost $100 billion.
The potential valuation of Anthropic indicates an increasing market excitement for generative AI. OpenAI itself has been in talks with investors about a potential sale of shares valued between $80 billion and $90 billion. This figure, as noted by The Wall Street Journal, would make OpenAI more expensive than companies like Nvidia or SpaceX in terms of valuation-to-sales ratio.
While these valuations are currently hypothetical, they signify the potential value of Microsoft's OpenAI stake and its ChatGPT technology in the context of the growing AI landscape.
Oppenheimer analyst Timothy Horan holds an Outperform rating on Microsoft stock and has set a target price of $410. As of early trading on Thursday, Microsoft stock was down 0.3% at $318.17.
