Three years ago, Sam Altman lit the fuse for what’s become the most explosive bull run in the history of tech startups with the launch of ChatGPT.
Along with OpenAI’s rapid rise to a $500 billion valuation, other prominent names like SpaceX, Anthropic and Anduril have seen astronomical markups of late. In total, a basket of seven of the highest-valued private tech companies is now worth $1.3 trillion on paper, almost doubling in the past year, according to Forge Global, which provides a marketplace for private investments.
Forge’s value assessments are based on trading activity as well as funding round valuations and tender offers.
That number is continuing to grow. On Friday, CNBC’s David Faber reported that Elon Musk’s xAI is raising $10 billion at a $200 billion valuation, just months after achieving a $150 billion valuation.
Like in the public markets, where the artificial intelligence boom has dramatically lifted the market caps of Nvidia, Broadcom, Oracle and others, AI is also the dominant driver of private market valuations.
OpenAI leads the pack (Forge values it at $324 billion), followed by four-year-old Anthropic at $178 billion, with xAI at $90 billion, according to Forge. Those three companies are all competing directly with one another, as well as with Google and Meta, to create the large language models of the future.
Databricks, which is also one of Forge’s seven leading companies, is valued at $100 billion, due to the data analytics startup’s hefty investments in AI.
The other companies in the group are Musk’s SpaceX, fintech company Stripe and defense tech company Anduril, valued by Forge at $456 billion, $92 billion and $53 billion, respectively. AI is having such a big impact on defense and national security that Forge created a new defense fund to give institutions exposure to the sector.
Sam Altman, CEO of OpenAI (L) and Elon Musk, CEO of Tesla.
Reuters
As as a group, they’ve quadrupled their value since late 2022, when ChatGPT first hit the market.
Forge CEO Kelly Rodriques said that the valuation surge is reflective of actual growth, not just projections.
“We’ve not seen this in the private market ever,” he said. “Companies that are growing at 100%, 200%, 300% on numbers that are already pretty big.”
The hunger for AI exposure is reshaping capital flows into AI, beyond just the few companies at the very top. According to Forge, 19 AI firms have raised $65 billion so far this year, accounting for 77% of all private-market capital.
With that kind of cash available, those companies have little incentive to going public, Rodrigues said.
“If these stocks are liquid and have access to as much capital as they can get, regulation is probably the only thing stopping them from staying private for as long as they want,” he said.
Even without being publicly traded, they’re having a significant impact on the public markets.
Oracle’s stock jumped 36% in a single day this month after the software maker’s earnings report, largely due to a massive contract with OpenAI. Broadcom also forged a new mammoth deal with the ChatGPT creator, while Microsoft continues to benefit from its substantial equity stake in the company.
Microsoft, Amazon, Google and Meta all recently raised capital spending guidance to reflect infrastructure demand.
OpenAI’s Altman sees some reasons for caution.
At a dinner with reporters in San Francisco last month, he described current valuations as “insane” and acknowledged that yes, “we are in a bubble.”
But he’s still betting big.
“You should expect OpenAI to spend trillions of dollars on datacenter construction,” he said. “We will spend maybe more aggressively than any company who’s ever spent on anything… because we just have this very deep belief in what we’re seeing.”
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