The launch of ChatGPT three years ago by Sam Altman to create what has now become the most subsequently became the most active bull run in tech startup history.
Other notable valuations, such as SpaceX, Anthropic, and Anduril, have also been astronomically marked up in recent years, in addition to the swift increase in the valuation of OpenAI to $500 billion.
According to Forge Global, which offers a marketplace over which private investments transpire, overall, a dozen of the most valuable privately held technology companies have risen in value on paper to nearly $1.3 trillion, nearly doubling in the last year.
The value appraisals of Forge are anchored on both trading and funding round-based value appraisals and tender offers.
On Friday, it was reported that xAI by Elon Musk is surging to $10 billion with a valuation of $200 billion, just a few months after getting a valuation of $150 billion.
Similar to the public markets, where the artificial intelligence hype has propelled the market valuations of AI stalwarts Nvidia, Broadcom, Oracle, and others by an order of magnitude, AI is also driving up the market valuations in the private market.
According to Forge, the three leaders are OpenAI (valued at $324 billion), four-year-old Anthropic at $178 billion, and xAI at $90 billion. All these three companies are in direct competition with each other and with Google and Meta to build the language models of the future.
One of the seven top companies in Forge, Databricks, is valued at $100 billion, as the data analytics startup invested millions in AI.
However, the other firms in the group include SpaceX, a Musk-owned fintech company and a defense technology firm, both worth billions of dollars, which were valued by Forge at $456 billion, $92 billion, and $53 billion. AI is so profoundly affecting defense and national security that Forge established a new defense fund to provide institutions with exposure to the sector.
They have multiplied their value four times as an entity since the end of 2022, when ChatGPT was initially released.
Forge CEO Kelly Rodriques added that the increase in valuation is based on real growth rather than projections. He said, “We’ve not seen this in the private market ever, companies that are growing at 100%, 200%, 300% on numbers that are already pretty big.”
Not just the handful at the top companies, but the frenzy to expose AI is transforming the capital flows into AI. Forge states that in the present year, almost 19 AI companies have raised $65 billion, which is 77 percent of all the money in the private market.
Rodrigues states that at that sort of cash level, the companies with minimal incentives are not much motivated to go public. He further adds, “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.”
They are making a big splash in the public markets, even though they are not publicly traded.
The stock of Oracle increased 36 percent within one day this month following the earnings report by the software maker, in part because of a massive deal with OpenAI. Broadcom has also established a new mammoth partnership with the creator of ChatGPT, as Microsoft still enjoys the benefits of a high equity share in the company.
Microsoft, Amazon, Google, and Meta have all recently increased capital spending plans to indicate infrastructure demand. While Altman of OpenAI sees certain cause to be cautious about.
Last month, in San Francisco, at a dinner with reporters, he said to reporters that the current valuations are “insane” and admitted that yes, “we are in a bubble.” As a result, he is claiming huge.
Altman said, “You should expect OpenAI to spend trillions of dollars on datacenter construction, 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.”
