Wall Street is "sizing up" the OpenAI IPO; are investment firms not interested?

OpenAI may still be at least six months away from going public, but Wall Street’s pre-market buzz has already quietly begun. Several investment banks are actively reaching out to public market investors to gauge market sentiment about this ChatGPT parent company’s IPO prospects — and the responses have been far more tepid than expected.

On March 9, according to tech media The Information, sources revealed that multiple banks competing for OpenAI’s underwriting business have started “sounding out” public market investors. The Information interviewed 11 public market investors, most of whom do not yet hold OpenAI shares.

Most respondents are cautious about this IPO, with core concerns centered on two points: first, unclear profitability — OpenAI predicts it will continue burning cash at least until 2030; second, overvaluation — the company recently raised funds at a valuation of $850 billion, which is 28 times its expected 2026 revenue, far exceeding Nvidia’s roughly 12x price-to-sales ratio.

The report suggests that the market’s “cool” response reflects deeper contradictions facing what could be the largest IPO in history: investors generally recognize OpenAI’s leading position in AI competition but remain hesitant about whether it can be reasonably valued in the public markets. Meanwhile, the rising strength of competitor Anthropic is further diverting investor attention and enthusiasm.

Valuation Dispute: 28x Price-to-Sales — What’s the High Price?

OpenAI’s recent $850 billion valuation for a new funding round, involving Nvidia, Amazon, and SoftBank, has already deterred many public market investors, and the IPO price could be even higher.

Based on 2026 projected revenue, $850 billion corresponds to about 28x price-to-sales. In comparison, Nvidia, regarded as a benchmark AI investment, currently trades at around 12x.

According to Bob Lang, founder of trading firm Explosive Options:

“I do think OpenAI is an excellent company with strong moats, but I don’t believe any valuation on the first day of trading is a good deal for investors.”

He said he likely would not participate in OpenAI’s public offering, especially given its valuation multiples exceeding Nvidia’s.

Lang also pointed out that the true beneficiaries of this IPO would be early investors who already hold shares and large cloud computing companies — they could cash out through this process.

Jim Chanos, a well-known short seller, referenced Nvidia to question OpenAI’s valuation logic:

“Nvidia essentially monopolizes the market, with rapid growth, high profit margins, and ample cash flow. Why should OpenAI be valued higher?”

Profitability Path: Burning Money Until 2030 — Will Public Markets Buy It?

Sources report that OpenAI itself forecasts it will remain unprofitable until at least 2030. This timeline unsettles public market investors who are accustomed to scrutinizing profitability.

Some investors worry whether the funds raised from the IPO can sustain OpenAI until it turns profitable, or if it will need to raise more capital later, diluting existing shareholders.

Mark Malek, CIO of Siebert Financial, said that even if OpenAI struggles to achieve significant profits in the short term, he would consider building a position after the IPO but would do so cautiously — similar to his strategy with Palantir.

Palantir’s current price-to-sales ratio is as high as 49, with growth far outpacing peers, but Malek believes Palantir’s risks are lower than OpenAI’s because of its more flexible cost structure.

“If Palantir loses a government contract, that’s bad, but they can cut staff. If you spend five years building a data center, you can’t just say ‘forget it.’ Palantir is like a Formula 1 racing car, while OpenAI is a fully loaded cargo ship.”

JPMorgan analysts noted in a January report that OpenAI’s move to introduce ads in ChatGPT helps retain users, but also observed that after announcing large-scale chip and data center spending plans, customer sentiment toward OpenAI was “mixed.”

Not everyone is just watching — some investors have made it clear they will consider shorting the stock once it goes public, betting that the market’s tolerance for its long path to profitability is limited.

Chanos shares this view. His core logic to clients is: “Go long on chip production, short on the data centers that store chips.” In other words, operating data centers itself is not a high-margin business, and OpenAI’s business model heavily depends on massive computing infrastructure investments.

Chanos also pointed out that there is a severe lack of detailed financial information on OpenAI, making in-depth analysis difficult. But he expects that once OpenAI files for an IPO, fierce debate about its competitive landscape will ensue:

“Will it be winner-takes-all, or will the market be fragmented like cloud computing? Or will one company become the standard like search engines and maintain it long-term? Currently, models are still constantly surpassing each other.”

Anthropic’s Disruption: Competitors Divert Funds and Attention

OpenAI’s IPO journey also faces potential pressure from competitor Anthropic.

At this week’s Morgan Stanley Annual Technology Conference, Anthropic CEO Dario Amodei disclosed that the company’s annualized revenue run rate has doubled to $20 billion. Recently, Anthropic completed a new funding round with a valuation of $380 billion, and its enterprise products like Claude Code are gaining strong sales momentum.

The Information previously reported that Anthropic expects its costs for training and operating AI models over the next few years to be significantly lower than OpenAI’s. Some investors are beginning to believe that with success in the enterprise market — where clients are willing to pay premiums for AI services — Anthropic’s long-term profitability could surpass OpenAI’s.

As Anthropic prepares for its own IPO, the two companies’ offerings could compete, further dispersing investor capital and enthusiasm. Chanos and others favor Anthropic’s more restrained approach to compute investments, viewing it as a more cautious and sustainable business model.

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