OpenAI began decade ago as nonprofit lab. Musk and Altman now rivals

On December 11, 2015, OpenAI was launched as a non-profit research laboratory Elon Musk A group of prominent technologists, including Peter Thiel and Reed Hoffman, have pledged $1 billion to develop artificial intelligence for the benefit of humanity. The idea was for the project to be free from commercial pressures and the pursuit of money.

A decade later, that founding mission has been forgotten.

Musk, now the world’s richest person, is long gone, having created a rival startup xAI. He has been embroiled in a heated legal and PR battle with OpenAI’s CEO and co-founder Sam Altman.

Beyond the world of nonprofits, OpenAI has emerged as one of the fastest-growing commercial entities on the planet, valued at $500 billion in the private market, with almost all of that value accumulated since the company launched ChatGPT three years ago. More than 800 million people now use chatbots every week.

Meanwhile, Musk’s xAI startup is expected to close a $15 billion round at a pre-money valuation of $230 billion this month, sources familiar with the matter said. said CNBC’s David Faber In late November.

OpenAI and xAI are two of the main ones, along with GoogleAnthropic and deadAnd money is being poured into AI models, as the market rapidly evolves from text-based chatbots to AI-generated videos and more advanced compute-driven forms of content, as well as agent AI, with large enterprises customizing tools to boost productivity.

For OpenAI, the price is almost incomprehensible: $1.4 trillion And growing. This is primarily for the massive data centers and high-powered chips needed to meet what the company considers to be insatiable demand for its technology. For now, OpenAI is a cash-burning machine, taking on tech giants and their chip suppliers, drawing comparisons to previous waves of high-growth tech companies that spent big for years to challenge the giants, but with mixed results.

“OpenAI has a very big role in the history of AI development, and it will have that role forever,” Gil Loria, an equity analyst at DA Davidson, said in an interview. “Now, will that role be Netscape or Google? We haven’t found that out yet.”

It’s a situation that would have been difficult to imagine in 2016, when… Nvidia CEO Jensen Huang carried the black DGX-1 supercomputer to OpenAI’s offices in San Francisco’s Mission District. Developing the $300,000 device cost Nvidia “a few billion dollars,” and there were no other buyers, Huang recently said on Joe Rogan’s podcast.

Musk, at OpenAI, was the only one who wanted that.

When Musk told him it was for a “non-profit company,” Hwang said he ran out of blood at the thought of putting such an expensive fund inside an organization that wasn’t meant to make money.

But behind the scenes, nonprofits were already under intense pressure, and Musk didn’t like what he saw.

“Guys, I’ve had enough. This is the straw that broke the camel’s back,” Musk books In an email to his co-founders in 2017, he warned that he would “no longer fund OpenAI” if it turned into a technology startup instead of a nonprofit. Altman responded the next morning: “I’m still excited about the nonprofit structure!”

In February of the following year, Musk left OpenAI’s board of directors, saying at the time that the move was intended to avoid a potential conflict of interest since his car company, TeslaDive deeper into artificial intelligence.

The story was more complicated.

Musk filed a lawsuit against OpenAI and Altman in early 2024, alleging that they had abandoned the company’s founding mission to develop artificial intelligence “for the broad benefit of humanity,” and he has regularly criticized OpenAI’s close ties to… MicrosoftIts main supporter. He also went to court to try to prevent OpenAI from becoming a for-profit entity, and earlier this year, he went even further To try to get it Artificial Intelligence Laboratory for $97.4 billion.

In October, OpenAI Announce It has completed a recapitalization, consolidating its structure as a non-profit corporation with a controlling stake in its for-profit business, which is now a public benefit corporation called OpenAI Group PBC.

Musk isn’t the only member of the OpenAI team who has turned into a bitter competitor. Siblings Dario and Daniela Amodei left OpenAI in late 2020 to found Anthropic, which said last month that Microsoft and Nvidia would invest in the company. the evaluation The financing round could reach $350 billion.

Anthropic’s Claude family of large language models is one of the biggest competitors to OpenAI’s GPT models.

Altman is betting that he can win the race by outpacing the competition. While his company has outlined plans to spend $1 trillion on AI infrastructure, Anthropic has made nearly $100 billion in recent computing commitments, spaced out at various intervals over the next few years.

This all amounts to a big bet that demand for AI services will continue rapidly.

“We have all these different AI vendors that are making these huge capital investments,” said David Menninger, executive director of software research at ISG. “There is a question about how long these capital investments will last and whether or not they will all be successful.”

Luria says Anthropic and others are making reasonable commitments based on their current growth trajectory and the funding they’ve already secured. But he said OpenAI’s approach is based on “a fantasy set of commitments” with “a weak belief that these numbers are possible.”

Altman he said last month He expects annual revenues to reach $20 billion by the end of this year and reach hundreds of billions by 2030. Its historic pace of growth has been a major boon for big tech companies.

oracle I almost fell A deal worth $500 billion To sell infrastructure services to OpenAI over five years. Chip makers Advanced micro devices and Broadcom We have incorporated OpenAI-related demand into a multi-year forecast.

But Oracle shares decreased 11% on Thursday after the software vendor reported weaker-than-expected revenue, sending Nvidia, CoreWeave and other AI-related stocks tumbling. Despite a surge in long-term contractual commitments from companies like OpenAI, Meta, and Nvidia, investors are increasingly concerned about Oracle’s debt load fueling buildouts.

However, in his 25 years in venture capital, “this was the mother of all waves,” said Matt Murphy, a venture capitalist from Menlo Ventures.

The combination of AI models, custom chips and hyperscale data centers raises the potential for trillion-dollar outcomes, said Murphy, an early investor in Anthropic. This explains the astonishing level of capital expenditures and astronomical valuations, he said.

Altman recently announced “code red” within his company, and has adjusted resources to focus on making ChatGPT faster, more reliable, and more personal, while delaying work on advertising, health and shopping agents, and a personal assistant called Pulse. His announcement came after Google issued Gemini 3 model last month, accelerating the search giant’s rise in the market.

On Thursday, OpenAI unveil ChatGPT-5.2, a faster, more capable reasoning model that the company says is its best system yet for everyday professional use. It also struck a three-year content and stock deal worth $1 billion Disney About Sora AI Video Generator.

Altman downplayed the threat posed by Google, telling CNBC that Gemini’s impact on the company’s metrics was less than OpenAI initially feared.

“I think when a competitive threat occurs, you have to focus on it and deal with it quickly,” Altman said.

He said he expects the company to exit code red by January.

— CNBC’s Kev Leswing contributed to this report.