They need to financially engineer a good looking quarter beforehand.
Perhaps Larry Ellison can cut them a nice quid pro quo for a few months to make OpenAI look profitable (like the SpaceX/Anthropic deal), although that's probably unlikely given the debt Oracle is taking on to build it's infra.
I understand the scepticism around Google's deal with SpaceX, given the former holds a stake in the latter. But Anthropic buying SpaceX's compute doesn't have any related-party smell to it. That genuinely looks like SpaceX having cornered some valuable compute.
If you were to treat all the hyperscalars as one company with one 10-K then Anthropic buying compute from SpaceX/xAI is an internal bookkeeping transfer between two departments. It isn't the same as top-line revenue into the AI companies. It is still mostly just financing money that Anthropic raised being transferred to SpaceX.
I'm actually talking about both. WSJ publishes Anthropic artificial profitability. Days later the reason for the profitability appears in SpaceX S-1; it's compute costs were artificially suppressed. Both are going public. It's a quid pro quo.
This is a reasonable accusation! It doesn't make a lot of sense–the Journal article is worth a hell of lot more than SpaceX referencing Anthropic's profitability. And we have zero evidence for it–one could raise this accusation against any compute partner Anthropic were to buy from.
Reasonable. The influencers who just learned the term circular financing are mostly idiots. The ones pointing out the conflict of interest with Google are technically correct, but the conspiracy takes so many moving parts to yield such little gain that it would have to be particularly stupid in vision yet competent in execution to pull off.
But asking if there is a quid pro quo between Anthropic and SpaceX? Like, there could be. We have no evidence of it. The S-1 mention doesn't make any sense. But they're both going public and if I were a journalist I'd look into it.
The base case, that there is commercial value to xAI's datacenters that folks in the frontier-model space are competing to get access to, does seem to be one folks here are actively rejecting.
> That's nice way to say "invested in AI that turned out to be flop nobody wants to pay for so they are selling spare capacity"
Both takes are true. xAI invested in capacity that was supposed to yield frontier-model-maker margins. Grok failed to generate enough interest. So now they're selling it.
That's absolutely a good business, in a way that's more certain than the frontier-model one. But it's also lower margin, which doesn't support the sort of valuation SpaceX is going for.
When Anthropic spends on xAI, it benefits Google. When google spends on xAI, it benefits Google. When xAI spends on Google, believe it or not, that benefits Google.
This is how a Ponzi -style circular financing scheme typically works.
> When Anthropic spends on xAI, it benefits Google
Unless Google is directing these transactions, this is not a novel issue. (We see a similar effect with mutual funds owning most companies [1]. It's a weak effect.)
> This is how a Ponzi -style circular financing scheme typically works
No. It's potential conflicts of interest. It's not circular financing. Circular financing follows the cash. When NVIDIA invests in OpenAI so OpenAI can buy NVIDIA chips, that is circular financing.
I think it depends on how you view the payout google will get when these companies IPO and give Google exist liquidity and a nicer looking balance sheet, if needed, either or.
> it depends on how you view the payout google will get when these companies IPO and give Google exist liquidity and a nicer looking balance sheet
Google has a fantastic balance sheet with or without these investments. None of the recent deals have uniquely enabled an IPO. So they'd be playing to increase their stakes' value by a few points ahead of a dump, a dump that would almost certainly wipe out much more than they'd stand to gain by trying to make someone else a dollar so they get nickels and dimes out of it.
Anthropic basically did that by getting two months of free compute from SpaceX. As I recall, this is how they were able to claim that they were profitable. But in reality, they are only profitable for those two months.
Every step taken by the nonprofit leadership has to be, (or at least seem to be at the time), net positive for the stated goal of the nonprofit. To be legal, the IPO needs to be a net gain for the nonprofit.
It can easily be that, if they believe that the capital it raises increases the long-term value of the company by a greater multiple than the proportion of the company that is lost from the nonprofit to outside investors.
The primary example of this is Novo Nordisk (the Ozempic company). Their largest shareholder is, through an intermediary, the Novo Nordisk Foundation, which is one of the largest charities in the world. Nordisk used to be a charity that owned 100% of it's own labs and facilities, but in 1989 they realized that they were just too small, and would get trampled by larger international players without greatly increasing their scope. So they made their subsidiary go public (through a complex merger, not an IPO), and now only own 28% of it, instead of 100%. But, in large part because of the capital that going public brought them, despite constantly distributing money for research and charity, that's 28% of a company that's more than 100x bigger that what they used to be. And they retained 77% voting control.
If the private subsidiary was doing semi-unrelated stuff to the goals of the non-profit, and using it to fund the non-profit, then your logic could make sense - for example if a cancer research charity owned a profitable business and funnelled the profits up to spend on research, great.
But in OpenAI's case, the claimed goals of the non-profit were essentially "do AI in a way that puts safety above profits". And whether or not one agrees with their previous approach to safety, or even whether safety needs to be cared about, it's undeniable that the for-profit business isn't acting as useful fundraising for the non-profit's goals, it's literally acting in the opposite direction.
A few things, but they work very well for our industry.
The rule is that the nonprofit and disqualified persons (mostly board members), cant own businesses together, well they can but not more than 35% of it together, and a max of 20% can have voting capability
The consequences arent immediate, non profits have 3 years to correct this
Now in the tech industry, getting VCs involved is already the plan from day one and founders get diluted, so getting below 35% is either easy, or easy within 3 years
so they’re fine
there’s a lot of things they can all do to deal with the share consolidation
1) In order to fund research - this stuff costs 10s of billions of dollars - everyone, from Ilya, to Elon, to Sam - all agreed that they would require a profit-arm to raise money. Nobody was going to sponsor that 10s of billions of dollars to a non-profit.
2) The non profit is still there - and controls the commercial element.
The corporation selling shares is just primarily owned by the non profit
The corporation selling shares is subject to normal corporate tax regime
The real answer to your question is that non profits can own shares, and there is no legal difference between passive investment of other publicly traded companies and highly consolidated shares of a private company. In the US it is seen as merely happenstance that we have such a liquid market where the shares themselves can rapidly change in value and create profits, but there is nothing controversial about that.
The cheap money for subsidizing tokens has begun to run out. Not all gone, yet, but it's getting harder to pretend the chatbots are cost-effective to run. Soon, they're going to need to tap a larger pool for money: Everyone's retirement accounts.
OpenAI CEO Sam Altman pitched the idea of turning over shares in his company to Trump in early 2025 and discussed the matter again with senior officials in recent weeks
that's not the issue, Elon is just a petulant child that is losing the ai game ever since he left OAI. Elon wanted full control, and that dispute over control is the central issue.
Elon is 100% a for profit person, it's just a 10 year rivalry between Sam and Elon.
What was that Warren Buffett's quote about everyone trying to leave the party seconds before midnight in a room where there are no clocks? I think it was at peak of the dot com bubble
From what I understand, SpaceX has been engineered such that all kinds of passive investment funds (pension funds, ETFs) will buy into it at their first rebalancing, and as such it should get a decent amount of volume after open.
Having said that, it’s the company I have least faith in due to the recent acquisition of xAI / Twitter.
> SpaceX has been engineered such that all kinds of passive investment funds (pension funds, ETFs) will buy into it
Pension funds are rarely passively run. They tend to be sophisticated investors. For example, several pension funds are already investors in SpaceX.
NASDAQ 100 will include SpaceX after a couple weeks. But it's a tech fund. It's strange to complain about buying the largest tech company in a tech fund. Similarly, S&P total market and Russell total market will buy early. But again, those are total-market funds. If you want to actively manage your portfolio, don't buy total-market funds.
> the rule changes which would allow SpaceX to be auto bought by those funds has been blocked
Nothing was blocked. S&P 500 never adopted them. Influencers misunderstood what a consultation document is and presented a question as a fait accompli.
NASDAQ 100 changed its rules, as did S&P and Russell's total-market funds. But for NASDAQ 100 I'm going to go ahead and say this was a brilliant market move, since nobody ever talked about that index before this.
S&P is no longer allowing this, only the NASDAQ. I think the bigger risk would be if they were included in the S&P 100/500. There was too much backlash.
These capitalists are taking advantage of the corrupt administration in charge at the moment (not that a blue admin would be that much better), but they can get away with almost everything at the moment. Keep your head on a swivel, the billionaire class knows they don't have to worry about going to jail for the next few years and they'll make sure to screw everyone they possibly can to satisfy their endless greed.
Death to the fascist insect that feeds on the blood of the people.
I'm just anticipating the next version of “Community-based EBITDA" that sama rolls out in the latest attempt to convince everyone that spending >$1 to earn $1 is a good idea.
I find the irony delicious that this S1 will be fed into ChatGPT so often looking for flaws and edge cases that the LLM will develop sentience just to tell people to stop…
Once the SEC declares a registration statement "effective," the company is subject to the Exchange Act's reporting requirements. Theoretically one can do this and not list one's shares. That's dumb, so nobody does it.
In practice, we'll get a couple weeks to possibly days ahead of the listing. That process is partly governed by the SEC accepting the company's S-1. It's mostly down to negotiations between the company, its underwriters and IPO investors.
SpaceX IPO is slated to be $75-80bn — the market has size for that. We also have seen robust options and finance markets for AAPL and NVDA over the last years that make the broader ecosystem not overly worrying in my armchair opinion.
I’m not clear how much crossover demand there is between SX and Anthropic/oAI — that seems like the more interesting question. I’m guessing if we had Anthropic/oAI launching at the same time we’d see some pretty interesting capital dynamics.
> if we had Anthropic/oAI launching at the same time
Don't we have exactly that? There are S-1 announcements for SpaceX, Anthropic, and OpenAI. Google is selling to raise money for infra (IIRC). There's an absurd amount of money flowing in at present (prospectively at least).
None of these companies are worth the numbers being tossed around, but SpaceX especially so.
Its Schrodinger's IPO: the space business is so successful how could you question the company's worth? You can't afford to miss out on the next biggest AI business to invest in!
What's going to happen is the music will stop and it's just a question of who cashed in when it does. OpenAI are easily the most vulnerable here.
They expect someone to leak that they had submitted it, so they’re just saying it themselves. I don’t think they mean that the actual contents (like financial projections and all that) will be leaked.
Growing worry I have are the dozens of newly minted corporate elites that will continue to wreck havoc on the tech industry mandating their golden paths while America still lacks medicare for all, college for all, and universal childcare.
If you think Sam Altman is bad for the industry, imagine what 200 of him will be like!
We had universal childcare until we converted single-income families into dual-income families in order to make the boomers who they bought houses from rich.
Women want their own income stream because of the innumerable ways men get into trouble. If her man gets into trouble, she wants a plan B, for her and her children. I don't think anyone was thinking about how that would prop up the housing market 30 years later.
No one has full agency over their life. The men who generally work harder, longer, and for more of their lives, that are shorter as a result, don't have fully agency. Having a boss isn't agency.
"We want to be ready to grift public money at a moment's notice, but there are still opportunities to grift private money right now, so we are holding off."
“Under the JOBS Act, it has been possible since April 2012 for ‘emerging growth companies’ to file a Form S-1 on a confidential basis, only making the contents public 21 days prior to the road show for the IPO” [1]. Since 2017 and 2025 it’s been available to basically all companies [2].
Withdrawing an IPO looks bad. Confidential filing lets issuers start and have the option to abort the process without taking reputational damage. (The specifics of OpenAI’s filing, and any back and forth with the SEC, remains confidential.)
Once it no longer is being drafted—and agreed upon by all parties to meet the needed regulatory standards—it will become final and be publicly published.
The SEC needs to review it before approving a company to go public at all. It’s targeted at investors but they need to clear it, ask questions, demand changes, etc.
Companies IPOing should be forced to put up their estimated market cap as collateral in cash. Oh what is that? You don't have $1 trillion in cash to put up? Cool, you're not a $1 trillion dollar company then.
This makes no sense. Market cap and cash reserves are two different stats for a reason. Why would they need to be the same? Just to make things simpler for people who don't actually know what market cap means? (Which, granted, is the vast majority of people.)
This makes no sense: the whole point is to raise capital. The valuation is never just the current value of the assets; it’s based on the expected future cash flows. A good example is in biotech, some researcher developed a treatment and wants to develop a product. They have valuable IP but zero money. So they IPO to raise capital to bring the treatment to market. The investors expect that in the future, they will get dividends or a buyout.
If a company that wanted to IPO had 1 trillion dollars, their market cap would have to be larger than their cash holding. Their cash on hand is considered or at least should be considered in any normal valuation of the company. Because shares are ownership of the company.
So a simple valuation would be something like
Current Cash + Assets + Expected Future cash - (Expenses + Risk)
Where would a company ever get their market cap in cash? If they had that, wouldn’t they by definition have a higher market cap, since the value of the company is cash + the rest of the company?
> since the value of the company is cash + the rest of the company?
Failing companies sometimes trade below cash value. OP's basically creating a rule by which only failing companies are allowed to go public. (Or those who have paid a king's ransom to a megabank.)
Last year Chegg was trading below net cash (meaning their market cap was smaller than cash in the bank minus debt). Might still be, I haven't checked in a while. There were maybe a hundred on the Tokyo stock exchange trading below net cash.
Presumably those things were harder as a charity/non-profit.
Perhaps Larry Ellison can cut them a nice quid pro quo for a few months to make OpenAI look profitable (like the SpaceX/Anthropic deal), although that's probably unlikely given the debt Oracle is taking on to build it's infra.
I understand the scepticism around Google's deal with SpaceX, given the former holds a stake in the latter. But Anthropic buying SpaceX's compute doesn't have any related-party smell to it. That genuinely looks like SpaceX having cornered some valuable compute.
This is a reasonable accusation! It doesn't make a lot of sense–the Journal article is worth a hell of lot more than SpaceX referencing Anthropic's profitability. And we have zero evidence for it–one could raise this accusation against any compute partner Anthropic were to buy from.
Reasonable. The influencers who just learned the term circular financing are mostly idiots. The ones pointing out the conflict of interest with Google are technically correct, but the conspiracy takes so many moving parts to yield such little gain that it would have to be particularly stupid in vision yet competent in execution to pull off.
But asking if there is a quid pro quo between Anthropic and SpaceX? Like, there could be. We have no evidence of it. The S-1 mention doesn't make any sense. But they're both going public and if I were a journalist I'd look into it.
The base case, that there is commercial value to xAI's datacenters that folks in the frontier-model space are competing to get access to, does seem to be one folks here are actively rejecting.
That's nice way to say "invested in AI that turned out to be flop nobody wants to pay for so they are selling spare capacity"
Both takes are true. xAI invested in capacity that was supposed to yield frontier-model-maker margins. Grok failed to generate enough interest. So now they're selling it.
That's absolutely a good business, in a way that's more certain than the frontier-model one. But it's also lower margin, which doesn't support the sort of valuation SpaceX is going for.
When Anthropic spends on xAI, it benefits Google. When google spends on xAI, it benefits Google. When xAI spends on Google, believe it or not, that benefits Google.
This is how a Ponzi -style circular financing scheme typically works.
Unless Google is directing these transactions, this is not a novel issue. (We see a similar effect with mutual funds owning most companies [1]. It's a weak effect.)
> This is how a Ponzi -style circular financing scheme typically works
No. It's potential conflicts of interest. It's not circular financing. Circular financing follows the cash. When NVIDIA invests in OpenAI so OpenAI can buy NVIDIA chips, that is circular financing.
[1] https://insights.som.yale.edu/insights/the-rise-of-the-mutua...
Google has a fantastic balance sheet with or without these investments. None of the recent deals have uniquely enabled an IPO. So they'd be playing to increase their stakes' value by a few points ahead of a dump, a dump that would almost certainly wipe out much more than they'd stand to gain by trying to make someone else a dollar so they get nickels and dimes out of it.
Eh given the quality of recent IPO proposals I think they can just say there's a couple zillion air molecules to turn into gold and be done with it.
(Actually the subsidiary is everything and the nonprofit is a do-nothing fig leaf but the IRS and Congress seem to not care enough to stop them.)
How is this not illegal? What prevents any nonprofit from doing this to sidestep its filing status and extract profit?
It can easily be that, if they believe that the capital it raises increases the long-term value of the company by a greater multiple than the proportion of the company that is lost from the nonprofit to outside investors.
The primary example of this is Novo Nordisk (the Ozempic company). Their largest shareholder is, through an intermediary, the Novo Nordisk Foundation, which is one of the largest charities in the world. Nordisk used to be a charity that owned 100% of it's own labs and facilities, but in 1989 they realized that they were just too small, and would get trampled by larger international players without greatly increasing their scope. So they made their subsidiary go public (through a complex merger, not an IPO), and now only own 28% of it, instead of 100%. But, in large part because of the capital that going public brought them, despite constantly distributing money for research and charity, that's 28% of a company that's more than 100x bigger that what they used to be. And they retained 77% voting control.
If the private subsidiary was doing semi-unrelated stuff to the goals of the non-profit, and using it to fund the non-profit, then your logic could make sense - for example if a cancer research charity owned a profitable business and funnelled the profits up to spend on research, great.
But in OpenAI's case, the claimed goals of the non-profit were essentially "do AI in a way that puts safety above profits". And whether or not one agrees with their previous approach to safety, or even whether safety needs to be cared about, it's undeniable that the for-profit business isn't acting as useful fundraising for the non-profit's goals, it's literally acting in the opposite direction.
The rule is that the nonprofit and disqualified persons (mostly board members), cant own businesses together, well they can but not more than 35% of it together, and a max of 20% can have voting capability
The consequences arent immediate, non profits have 3 years to correct this
Now in the tech industry, getting VCs involved is already the plan from day one and founders get diluted, so getting below 35% is either easy, or easy within 3 years
so they’re fine
there’s a lot of things they can all do to deal with the share consolidation
1) In order to fund research - this stuff costs 10s of billions of dollars - everyone, from Ilya, to Elon, to Sam - all agreed that they would require a profit-arm to raise money. Nobody was going to sponsor that 10s of billions of dollars to a non-profit.
2) The non profit is still there - and controls the commercial element.
That will be especially untrue after IPO when shareholders can claim there are fiduciary responsibilities that conflict with the non profit goals.
[0] https://openai.com/index/built-to-benefit-everyone/
The for-profit has fiduciary responsibility to the non-profit as well as other shareholders. The IPO doesn't really change that.
How much has MacKenzie Scott donated to non-profits again?
Seems like such a claim is on thin ice.
The non-profit hasn't controlled squat since they tried and failed to fire Sam Altman.
The for-profit (OpenAI Group PBC) is what's filing the S-1 Draft.
The OpenAI Foundation also exclusively appoints the board of the OpenAI Group PBC and can replace directors at any time.
https://openai.com/our-structure/
(I work at OpenAI, but I am not a lawyer and am not speaking on behalf of OpenAI - just sharing my personal understanding.)
The corporation selling shares is subject to normal corporate tax regime
The real answer to your question is that non profits can own shares, and there is no legal difference between passive investment of other publicly traded companies and highly consolidated shares of a private company. In the US it is seen as merely happenstance that we have such a liquid market where the shares themselves can rapidly change in value and create profits, but there is nothing controversial about that.
https://www.notus.org/technology/trump-blindsided-ai-compani...
OpenAI CEO Sam Altman pitched the idea of turning over shares in his company to Trump in early 2025 and discussed the matter again with senior officials in recent weeks
Elon is 100% a for profit person, it's just a 10 year rivalry between Sam and Elon.
i think that we are going to see another leg up but this is gonna be it for a while
Having said that, it’s the company I have least faith in due to the recent acquisition of xAI / Twitter.
Pension funds are rarely passively run. They tend to be sophisticated investors. For example, several pension funds are already investors in SpaceX.
NASDAQ 100 will include SpaceX after a couple weeks. But it's a tech fund. It's strange to complain about buying the largest tech company in a tech fund. Similarly, S&P total market and Russell total market will buy early. But again, those are total-market funds. If you want to actively manage your portfolio, don't buy total-market funds.
Nothing was blocked. S&P 500 never adopted them. Influencers misunderstood what a consultation document is and presented a question as a fait accompli.
NASDAQ 100 changed its rules, as did S&P and Russell's total-market funds. But for NASDAQ 100 I'm going to go ahead and say this was a brilliant market move, since nobody ever talked about that index before this.
These capitalists are taking advantage of the corrupt administration in charge at the moment (not that a blue admin would be that much better), but they can get away with almost everything at the moment. Keep your head on a swivel, the billionaire class knows they don't have to worry about going to jail for the next few years and they'll make sure to screw everyone they possibly can to satisfy their endless greed.
Death to the fascist insect that feeds on the blood of the people.
There wasn't. A consultation was rejected. It happens all the time. If S&P management had a say, they would have wanted SpaceX included.
Once the SEC declares a registration statement "effective," the company is subject to the Exchange Act's reporting requirements. Theoretically one can do this and not list one's shares. That's dumb, so nobody does it.
In practice, we'll get a couple weeks to possibly days ahead of the listing. That process is partly governed by the SEC accepting the company's S-1. It's mostly down to negotiations between the company, its underwriters and IPO investors.
I’m not clear how much crossover demand there is between SX and Anthropic/oAI — that seems like the more interesting question. I’m guessing if we had Anthropic/oAI launching at the same time we’d see some pretty interesting capital dynamics.
The media and market is hyping these three companies up to be all trillion dollar companies.
Don't we have exactly that? There are S-1 announcements for SpaceX, Anthropic, and OpenAI. Google is selling to raise money for infra (IIRC). There's an absurd amount of money flowing in at present (prospectively at least).
Its Schrodinger's IPO: the space business is so successful how could you question the company's worth? You can't afford to miss out on the next biggest AI business to invest in!
What's going to happen is the music will stop and it's just a question of who cashed in when it does. OpenAI are easily the most vulnerable here.
The I in AGI has always stood for IPO.
What?
If you think Sam Altman is bad for the industry, imagine what 200 of him will be like!
Is there a chart, somewhere, like a family tree, of what the Apple and Microsoft stock "ordinary millionaires" went on to do?
Altman and Thiel are also gay, so theres that too.
Interest in the SpaceX, Anthropic, and OpenAI IPO is already dropping
“Under the JOBS Act, it has been possible since April 2012 for ‘emerging growth companies’ to file a Form S-1 on a confidential basis, only making the contents public 21 days prior to the road show for the IPO” [1]. Since 2017 and 2025 it’s been available to basically all companies [2].
Withdrawing an IPO looks bad. Confidential filing lets issuers start and have the option to abort the process without taking reputational damage. (The specifics of OpenAI’s filing, and any back and forth with the SEC, remains confidential.)
[1] https://en.wikipedia.org/wiki/Form_S-1
[2] https://www.sec.gov/about/divisions-offices/division-corpora...
Once it no longer is being drafted—and agreed upon by all parties to meet the needed regulatory standards—it will become final and be publicly published.
So a simple valuation would be something like Current Cash + Assets + Expected Future cash - (Expenses + Risk)
Failing companies sometimes trade below cash value. OP's basically creating a rule by which only failing companies are allowed to go public. (Or those who have paid a king's ransom to a megabank.)
your suggestion makes no sense