- Deal would double OpenAI's valuation from just two years ago.
- Microsoft stands to benefit from the firm's potential.
- Questions remain, however, about what artificial intelligence can achieve.
ChatGPT, the bot that upended artificial intelligence (AI) upon its release two months ago, is happy to answer just about any question — except how much it's worth.
"I'm sorry, but I don't have information about the value or worth of ChatGPT or any other specific language model," it responded when posed that very query.
The bot's human creators at parent OpenAI have a pretty specific answer: $29 billion, more than double its valuation two years ago.
OpenAI has entered talks to sell existing shares to venture capital firms Thrive Capital and Founders Fund, The Wall Street Journal reported. The firms would buy shares in a tender offer from existing shareholders, including employees, that would value the company at $29 billion.
The tender deal reportedly could total $300 million. A similar deal in 2021 valued the company at $14 billion.
If completed, the deal would represent one of the few market bright spots for a technology sector facing myriad challenges. Technology startups have struggled in recent months, with many laying off workers amid plunging valuations in private market transactions. Layoffs have increased among large tech firms as well, as the tech-heavy Nasdaq Composite Index lost a third of its value last year.
Write Me An Essay
OpenAI has quickly captured the public's fascination with ChatGPT, a language processing tool that interacts with users via human-like conversations. The program has won acclaim -- and some derision -- for its ability to answer complex questions.
For example, it has shown the capability to write complete essays based on user requests -- even though the chatbot's main page warns that it "may occasionally generate incorrect information" and "harmful instructions or biased content."
Still, its essays are good enough that New York Public Schools have outlawed student use of ChatGPT.
Microsoft invested $1 billion in OpenAI in a 2019 deal that made it the startup's preferred partner in helping it market new technologies. In addition to ChatGPT, OpenAI last year introduced Dall-E 2, an image-generation system, and the company has said it one day hopes to market programs that fully mirror human intelligence and capabilities.
AI's Elusive Potential
Led by tech investor Sam Altman, the firm has generated tens of millions of dollars in revenue, The Journal reported, through selling its artificial intelligence software to developers. But questions remain about the money-making potential of OpenAI's technology.
A report issued by Deloitte in October found that while 94% of business leaders surveyed called AI "critical" to their organizations' success in the next five years, half of those surveyed reported low achievement from the AI they've employed so far.
Nonetheless, AI's potential remains appealing, and most analysts agree tech firms who supply it ultimately will benefit.
In a research note released this week, Gia Luria, a tech analyst with D.A. Davidson, issued a price target of $270 per share for Microsoft. Luria cited the "unprecedented activity" associated with ChatGPT's release as a key reason for his "buy" rating on the stock, which rose as much as 0.6% to $223.65 per share in Friday trading.
"We believe Microsoft's investment in OpenAI will translate to significant underappreciated upside," Luria stated in his report. "Longer-term, we believe incorporating ChatGPT into Bing (Microsoft's search engine) may provide Microsoft with a once-a-decade opportunity to unseat Google's Search dominance."