Is OpenAI's Deal Peak AI Bubble?

The leaked valuation for OpenAI’s in-process capital raise is $340 billion on 2024 revenue of approximately $4 billion (with $5 billion of losses), which implies a rich 85x revenue multiple.

• OpenAI’s 85x revenue multiple feels rich considering that OpenAI competes against open source competitors such as DeepSeek and META (Llama), whose models are far less expensive to operate.

• In addition, OpenAI faces stiff competition from Google (Gemini) as well as from Amazon-backed Anthropic. xAI is also a significant player.

• OpenAI’s proposed valuation is not surprising when one considers that Softbank is involved in the deal. Is there a deal that Softbank has not overpaid for? WeWork comes to mind.

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