I‘m sure you‘ve been fascinated by ChatGPT and are wondering if you can invest in its meteoric rise. Unfortunately you can‘t buy ChatGPT stock directly yet – but there are still some smart options for investors to capitalize on this viral AI phenomenon.
Here‘s my in-depth guide on the investing prospects around ChatGPT, key stocks that provide exposure, and how you may be able to buy its stock more directly in the future through an IPO.
Let‘s dive in!
Can You Invest In ChatGPT Stock Right Now?
The hottest question out there is can average investors buy stock in ChatGPT?
The short answer is no, there is no direct way to purchase stock in ChatGPT at this time.
That‘s because ChatGPT was created by a private company called OpenAI, which has not gone public on the stock market yet. Without an IPO, everyday investors can‘t buy OpenAI shares.
Essentially, ChatGPT doesn‘t have its own ticker symbol and isn‘t trading on exchanges like the NYSE or Nasdaq.
OpenAI operates as a private business, raising substantial funding from big-name investors like Microsoft instead of individual shareholders. So direct ownership through stock purchases isn‘t possible currently.
But don‘t worry! While you can‘t buy OpenAI or ChatGPT stock outright, there are still some smart ways to invest in its potential indirectly…
Invest In Microsoft Stock For Exposure
The best public company to invest in for exposure to ChatGPT is Microsoft Corporation (NASDAQ: MSFT).
Here‘s why Microsoft is the closest thing to buying ChatGPT stock right now:
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In January 2023, Microsoft announced a massive $10 billion investment into OpenAI, the startup behind ChatGPT. This huge backing shows their confidence in its future.
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Microsoft has already integrated ChatGPT into its Bing search engine in a major partnership deal. This leverages ChatGPT‘s advanced conversational AI capabilities to enhance Bing.
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As OpenAI‘s biggest partner deploying its tech, Microsoft stock benefits tremendously from ChatGPT‘s success. The more it grows, the more Microsoft sees gains.
In summary, buying Microsoft stock provides indirect exposure to invest in ChatGPT‘s potential. Think of it as the next closest thing to buying OpenAI or ChatGPT shares directly.
And as a tech giant with $2.3 trillion market cap, Microsoft was already a smart long-term investment. Their partnership with ChatGPT makes MSFT stock that much more compelling.
So if you‘re asking how to invest in the ChatGPT phenomenon, look no further than the software behemoth in Redmond!
Other Stocks That Benefit From Generative AI Growth
While Microsoft is the clearest public stock play on ChatGPT, other technology companies could benefit from its rise:
Alphabet (NASDAQ: GOOG)
- Parent company of Google
- Developing its own AI chatbot "Bard" to rival ChatGPT
- Huge resources to compete in generative AI space
Amazon (NASDAQ: AMZN)
- Massive cloud computing platform AWS expands AI offerings
- Owns Alexa virtual assistant with conversational abilities
- Could integrate generative AI technologies into AWS
Nvidia (NASDAQ: NVDA)
- Leading producer of key GPU chips needed to run AI systems
- Provides hardware basis for generative AI models like ChatGPT
- Powers modern AI computing infrastructure
IBM (NYSE: IBM)
- Pioneer in artificial intelligence research
- Investing heavily in AI and quantum computing
- Cloud and enterprise services stand to gain from generative AI adoption
Though not direct plays like Microsoft, these tech stocks participate in the expansive AI and cloud computing space. Generative AI could become a rising tide that lifts multiple ships.
While risky, I view these as smart long term investments with or without the success of ChatGPT itself. This space has enormous growth potential in the years ahead.
Comparing Key Investment Metrics
Here‘s a quick glance comparing relevant stocks on key investment metrics:
| Company | Ticker | Market Cap | P/E Ratio | 1 Year Performance |
|---|---|---|---|---|
| Microsoft | MSFT | $2.3T | 29x | -18% |
| Alphabet | GOOG | $1.4T | 19x | -30% |
| Amazon | AMZN | $1T | 82x | -48% |
| Nvidia | NVDA | $400B | 75x | -46% |
| IBM | IBM | $112B | 16x | 4% |
*Market cap data as of 2/20/23 (via YCharts)
You can see Microsoft stands out with massive size and relatively attractive valuation multiples compared to high-flying peers.
Amazon and Nvidia appear overvalued based on nosebleed P/E ratios, but their growth narratives still entice investors.
Will OpenAI Eventually Go Public Via An IPO?
Based on internal revenue estimates, many experts speculate OpenAI could hold an initial public offering (IPO) sometime in 2024 or 2024.
According to Reuters, OpenAI is projected to hit $1 billion in revenue by 2024. At that scale, accessing public stock markets through an IPO starts making much more sense.
Going public would finally allow average investors to buy OpenAI stock directly and invest in ChatGPT‘s future prospects.
An IPO feels imminent given the white-hot generative AI space and OpenAI‘s surging valuation. Private funding rounds in 2021 valued the company at over $29 billion already.
And with Microsoft pumping in $10 billion more, you can bet they‘ll push for an IPO payday down the line.
OpenAI has not officially filed IPO paperwork yet. But ChatGPT‘s breakout success accelerates pathway towards public stock listing.
Once OpenAI trades on the Nasdaq or NYSE, you‘ll be able to buy its stock directly rather than investing in partners like Microsoft.
It would join other AI startups like Snowflake (NYSE: SNOW) which went public to immense success. Snowflake now boasts a market cap approaching $60 billion.
The generative AI space is experiencing similar exponential growth and excitement. An OpenAI IPO feels imminent given the circumstances.
While the timeline is still uncertain, I‘d watch closely for any IPO announcements. It could happen quicker than many expect given the momentum.
How Does Potential OpenAI Valuation Compare?
Let‘s discuss OpenAI‘s potential valuation if it does hit public markets.
According to private funding rounds, OpenAI was valued at $29 billion in 2021 even before ChatGPT‘s launch. Based on the mania around generative AI, estimates indicate:
- An IPO in 2024 could value OpenAI around $45 billion
- By 2024 it could be valued at $60 billion+ if growth continues
These are massive potential numbers for a startup. Snowflake mentioned above had a market cap of $72 billion shortly after its IPO.
For reference, Roblox (NYSE: RBLX) went public in 2021 at an initial $45 billion valuation. Shopify (NYSE: SHOP) was valued at $30 billion at its 2015 IPO.
So OpenAI would instantly become one of the highest valued tech IPOs in recent memory. Of course, this depends heavily on generative AI adoption and financials panning out.
But it demonstrates the sheer potential OpenAI holds in investors‘ eyes. There is clearly enormous belief in its long term prospects.
An IPO would provide a way to tap into this potential and finally own a piece of the future profits.
What Are The Risks Around Investing?
Of course, any hot new technology like generative AI comes with ample risk for investors. Here are some key considerations:
- Heavy competition from tech giants like Google and Microsoft
- Regulatory scrutiny and potential restrictions
- Safety concerns around AI chatbots spreading misinformation
- Lofty private valuations may depend on flawless execution
- Chance the hype fades quickly if people lose interest
Essentially, OpenAI must achieve mainstream success, dominate competitors, navigate legal concerns, and live up to sky-high expectations and valuations. Not an easy path!
But with Microsoft‘s backing adding legitimacy, I believe OpenAI can overcome these hurdles. The TAM (total addressable market) for generative AI seems enormous long term.
Just know investing now likely depends on OpenAI executing flawlessly on their grand vision in an emerging field. The hype could fade if real-world usage stalls.
Still, Microsoft‘s stamp of approval signals they believe OpenAI and ChatGPT have the potential to fundamentally transform multiple industries. And I tend to trust Microsoft‘s foresight!
Expert Opinions On Investing In Generative AI
Here are some key expert takes on the investment prospects surrounding ChatGPT and generative AI:
Morgan Stanley technology analyst Keith Weiss:
“This could be the most profound development in artificial intelligence in a long time. ChatGPT is going to have reverberations in terms of competition, investment, and startups in AI."
ARK Invest CEO Cathie Wood:
“For the first time, we believe artificial general intelligence is within reach and could usher in a new age of productivity.”
Wedbush Securities analyst Dan Ives:
“The stakes have increased dramatically for tech stalwarts like Microsoft and Google, among others, as this arms race to stand up and scale these AI models accelerates.”
As you can see, industry experts seem extremely bullish on generative AI‘s disruptive potential. The thundering response to ChatGPT could signal a key inflection point.
There is a widespread belief its breakthroughs may "usher in a new age of productivity", as Cathie Wood noted. That bodes quite well for investment prospects.
The Bottom Line
Let‘s recap the key points:
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There‘s no direct way to buy ChatGPT or OpenAI stock currently since the company remains private.
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Purchasing Microsoft shares provides the closest public stock exposure to invest in ChatGPT‘s growth.
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Other tech stocks like Google, Amazon, and Nvidia participate in the wider AI and cloud computing space.
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Experts predict OpenAI will go public via an IPO within the next 1-2 years.
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This would finally allow everyday investors to buy OpenAI stock directly.
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An IPO could value OpenAI at $45 to $60 billion or more based on private funding rounds.
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But competition, regulation, misuse potential, and lofty expectations present risks to the investment thesis.
In summary, Microsoft offers a promising way to invest in ChatGPT until OpenAI files for an eagerly anticipated IPO.
Buying Microsoft stock provides indirect exposure to ride OpenAI‘s growth in the red-hot generative AI sector.
Just be ready to buy up shares if OpenAI does hit public markets! I know I‘ll have my buy orders ready for this leading AI disruptor.
Hope this guide gives you clarity on how to capitalize on the ChatGPT phenomenon as an investor. Let me know if you have any other questions!
