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How to Invest in Open AI (Chat GPT) Stock

14 minutes
intermediate
Cristian Cochintu
Cristian Cochintu
13 June 2024

OpenAI has swept the globe, with its ChatGPT chatbot going viral and reaching over 180.5 million users by 2024. While direct investment in OpenAI isn't possible - at least, not right now, there are several ways to invest indirectly.

OpenAI is an AI research facility that is attracting interest from the media and investors as artificial intelligence gains more attention. For those wondering, "How can I buy OpenAI stock?", there's some bad news: the company is currently privately held and not listed on any major stock exchange.

Although you can't directly purchase OpenAI stock, you can invest in other stocks to gain exposure to OpenAI and the explosion of Artificial Intelligence sector that OpenAI has helped set alight.

How to Trade or Invest in Open AI – Takeaways

  • Step 1: Become knowledgeable about the AI Investment industry. AI makes up only a small percentage of the technology market, with OpenAI being a major player. To better understand AI, consider exploring and investing in other top technology stocks via top brokerages like CAPEX.com. 
  • Step 2: Open a brokerage account. To prepare for the possibility that OpenAI might pursue an IPO, or to get exposure on AI, the first step is to open a brokerage account. Trading lets you speculate on rising or falling prices via CFDs, investing lets you take direct ownership of various AI assets available already.
  • Step 3: Keep abreast of business updates. Upon entering and researching the market, it is advisable to stay informed about any statements made by OpenAI. Keep yourself engaged and curious about OpenAI's future advancements so that you'll be ready if the firm decides to pursue an IPO.

    

Or, if you want to gain a deeper understanding of OpenAI's investment ways before taking a position, continue reading our full guide.

What is Open AI?

Best known for leading the Artificial Intelligence trend, OpenAI is a research organization dedicated to artificial intelligence. The company's mission is to advance AI and make this research widely accessible to the public. OpenAI operates through two segments: the non-profit OpenAI Inc. and its for-profit subsidiary OpenAI L.P. Their goal is to design, develop, and disseminate highly autonomous systems that mimic human speech patterns and performance.

OpenAI founded in 2015 with a focus on developing AI and machine learning tools for various applications, OpenAI initially launched OpenAI Gym, an open-source framework for creating reinforcement learning algorithms. This product marked its shift towards broader AI research applications.

In 2018, OpenAI introduced the concept of Generative Pre-trained Transformer (GPT), a neural network—a machine learning model—trained on datasets to simulate the human brain. DALL-E, an image-based version of ChatGPT, allowing users to instruct the generative AI model to create graphics, was released in 2021. ChatGPT gained significant traction as the leading generative AI and chatbot tool for generating resumes, survey questions, and chatbot responses, following its launch in November 2022.

Released in November 2022, ChatGPT is arguably the company's most renowned product, acclaimed as the world's most advanced chatbot for its capacity to furnish answers to users across a vast array of subjects. Discussions persist regarding its merits, limitations, and applications across diverse industries.

Can you buy Open AI stock?

If you've searched through your trading app or trading platform, you might have noticed that OpenAI doesn't have a stock symbol. As mentioned, OpenAI isn't publicly traded, so its shares aren't accessible to the public. Therefore, you can't buy OpenAI stock direct.

Understanding the difference between privately held and publicly traded companies is crucial to grasp why purchasing OpenAI shares isn't possible. Publicly traded firms list their stock on global exchanges.

Publicly traded companies, as the name suggests, are owned by members of the public who buy stocks. These businesses are regulated and overseen by the Securities Exchange Commission, and they must disclose financial and income information to investors.

As of 2024, OpenAI remains a privately held company, meaning you won't find an OpenAI ticker or stock symbol to invest in. The founders' decision not to offer shares to individual investors could be influenced by the company's hybrid structure, comprising both for-profit and nonprofit entities.

Although direct purchases of OpenAI stock are not permitted, there are still ways to invest. Let's explore how.

How to invest in OpenAI?

Many investors are keen to know how to purchase OpenAI stock, given their position at the forefront of artificial technology. However, OpenAI is not a public company, so buying its stock directly is not feasible. Yet, investors can still gain exposure to the company by investing in stocks and ETFs linked to OpenAI.

Invest in Open AI indirectly (via Microsoft)

If you're not an accredited investor, buying OpenAI shares directly isn't possible. Your best bet is to invest indirectly through Microsoft (MSFT), as the two companies have close ties.

Microsoft's extensive investment in OpenAI amounts to $11 billion to date, with a 49% ownership stake. Their initial commitment of $1 billion in 2019 was followed by a $10 billion investment in early 2023, resulting in a current stake worth approximately $43 billion. Investors can gain exposure to OpenAI indirectly through Microsoft stock, readily available in stock brokerage accounts.

Invest in Open AI indirectly (via Microsoft) with Capex.com

Unless OpenAI significantly expands, Microsoft's 49% stake in the approximately $86 billion company will have minimal impact on its market value of $3.07 trillion.

Microsoft has integrated OpenAI's technology into key products like Windows, Office, GitHub, and Bing, known collectively as "Copilots." GitHub Copilot, priced between $10 and $20 per month, has garnered over one million paying users within 18 months (about 1 and a half years) of its launch.

Microsoft's 2023 annual report highlights GitHub Copilot's role in enhancing developer productivity, claiming a 55 percent faster completion of coding tasks. Throughout 2023, Microsoft strategically integrated OpenAI's technologies into its applications. GPT-4, OpenAI's latest large language model, now powers Microsoft's Bing search engine. Initially, the unconventional responses from the updated Bing raised concerns, prompting Microsoft to address and minimize them.

If 100 million users pay for a Copilot, Microsoft's top line will increase by approximately 18% to $36 billion annually from recurring revenue, which is now estimated to be over $200 billion. AI applications are anticipated to use a lot of cloud computing, as Microsoft's Azure is now the second-largest cloud computing provider (behind Amazon).

Certainly, beyond its association with OpenAI, there are additional compelling reasons to contemplate investing in Microsoft stock. The company stands out as a frontrunner in various burgeoning technology domains, including cloud services, gaming, and quantum computing. and is one of the best stocks to buy for 2024.

Trade and invest in leading AI stocks

While investing directly in OpenAI might not be feasible at present, you can still explore artificial intelligence investments through other publicly traded avenues. Like OpenAI, several tech firms are actively engaged in AI research. It's often said that shovel vendors fare better during a gold rush than prospectors themselves. Investing in companies that manufacture the hardware essential for AI could provide a lucrative opportunity to partake in the AI "gold rush."

Generally, stocks of companies leveraging artificial intelligence (AI) in their products, services, or applications are termed AI stocks. While only a few companies in the Nasdaq 100 technology index currently integrate AI into their customer solutions, the anticipated widespread adoption of AI across various industries is expected to significantly impact the economy. Industries such as manufacturing, healthcare, finance, marketing, education, and resources are actively developing AI-enabled solutions.

Nvidia (NVDA)

OpenAI does not receive direct funding from Nvidia (NVDA). However, the AI megatrend greatly benefits semiconductor stocks. In 2023, Nvidia experienced a significant surge in chip demand as consumers sought to capitalize on the AI boom. With record data center sales, up 279% year over year to $14.5 billion, Consequently, its earnings increased dramatically, reflecting a twelvefold surge due to the revenue spike. As of 2024, Nvidia's market capitalization is $2.770 T.

Nvidia (NVDA) one of the leading AI stocks - Capex.com

"Our significant growth reflects the industry's broad transition towards accelerated computing and generative artificial intelligence," remarked Jensen Huang, the company's founder and CEO, in the press release outlining their third-quarter earnings.

If you're optimistic about the advancement of artificial intelligence, it's hard to imagine a future where Nvidia doesn't significantly expand. (Let's not overlook Nvidia's announcement of a 10-for-1 stock split on May 22, 2024, which enhances its appeal to investors).

Advanced Micro Dev (AMD)

Advanced Micro Dev (AMD), a leading semiconductor manufacturer, plays a vital role in powering the computing systems that drive artificial intelligence. With its diverse product range, AMD has forged strong connections with the technical community. Major players like Google, Amazon, Microsoft, and Oracle rely on AMD CPUs for their cloud computing services. As more businesses transition to the cloud, the demand for AMD products is expected to rise.

AMD one of the leading AI stocks - Capex.com

Furthermore, AMD provides tailored CPUs for leading gaming consoles like Microsoft's Xbox Series S and Sony's PlayStation 5. Of interest is the collaboration between AMD and Microsoft to advance AI processor technology. Microsoft seeks to secure an adequate supply of chips for its rapidly expanding AI division while also positioning itself as a stronger competitor to Nvidia. This partnership benefits AMD on multiple fronts.

Like Nvidia stock, AMD stock is on a strong rise and is one of the most exciting AI stocks. As of 2024, AMD's market capitalization is $264.88 Billion

Amazon (AMZN)

Amazon (AMZN) is arguably the firm that uses artificial intelligence the most. One of the proponents of machine learning and artificial intelligence has been Jeff Bezos, the company's founder and CEO. Technology has always been at the heart of Amazon, even though the company began as an online store.

Amazon one of the best AI stocks - Capex.com

Artificial intelligence (AI) is being used by Amazon in many different areas of its business today. AI is essential to many Amazon services, such as the well-known voice-activated device Alexa and the cashierless grocery shop Amazon Go. In addition, the cloud infrastructure tool Sagemaker from Amazon Web Services leverages AI to facilitate the deployment of superior machine learning models for developers and data scientists.

Artificial intelligence is also the foundation of Amazon's e-commerce operation, as its video and music streaming engines are powered by algorithms. Furthermore, Amazon classifies products using artificial intelligence. to enhance both the platform and the user experience even more. As of 2024, Amazon's market capitalization is $1.836 Trillion.

Trade and invest in AI ETFs

Although OpenAI's unique status prevents its shares from being included in ETFs, investors can still invest in related AI projects if they are not comfortable selecting individual stocks. Consider top technology-focused exchange-traded funds (ETFs) that provide exposure to generative technologies like OpenAI.

Here we feature some of the most popular ETFs with exposure to the AI sector. As you consider these options, be sure to review the fund's prospectus to understand the investment strategy, holdings, and fees.

iShares Exponential Technologies ETF (XT)

The iShares Exponential Technologies ETF (NASDAQ: XT) may be an appealing option for investors looking for a technology investment with a lower expense ratio. Compared to other technology-focused ETFs, this one has a net expense ratio of 0.46%, allowing you to retain more of your gains. XT holds assets in various technology-related industries, including automation and robotics.

iShares Exponential Technologies ETF on of the best AI ETFs - Capex.com

The XT Fund, a large-cap fund, aims to track the Morningstar Exponential Technologies Index. It selects international stocks, including those in artificial intelligence, that are developing cutting-edge technologies with the potential to disrupt their respective industries. Approximately 53% of the fund's holdings are estimated to be in the information technology and healthcare sectors. The AI fund's top three holdings are Nvidia (NVDA), First Solar Inc (FSOLAR), and Moderna Inc.

ROBO Global Robotics & Automation ETF (ROBO)

The ROBO Global Robotics & Automation ETF (NYSE: ROBO) aims to provide investors with access to companies at the forefront of technological innovation, particularly in robotics and automation driven by artificial intelligence. The fund offers diverse investment opportunities, as no single asset constitutes more than 4% of its holdings. However, compared to other ETFs, ROBO can be more expensive due to its nearly 1% expense ratio.

ROBO Global Robotics & Automation ETF on of the best AI ETFs - Capex.com

The Robo Global Artificial Intelligence Fund was introduced in May 2020 to track the performance of the ROBO Global Artificial Intelligence Index, an AI-focused index established by Robo Global in 2013. Like the WisdomTree AI Fund, it gives investors access to numerous businesses that use artificial intelligence in various forms. The AI fund's top three holdings are Harmonic Drive Systems and IPG Photonics Corp. (IPGP) and Zebra Technologies Corp. (ZBRA).

Global X Robotics & Artificial Intelligence ETF (BOTZ)

The Global X Robotics & Artificial Intelligence ETF (NASDAQ: BOTZ), an exchange-traded fund, invests in companies involved in the advancement of AI. The fund's top holdings include stocks like Nvidia (NVDA), Intuitive Surgical (ISRG), and private AI development firms such as ABB Ltd.

Global X Robotics & Artificial Intelligence ETF on of the best AI ETFs - Capex.com

The Global X Robotics & Artificial Intelligence ETF (BOTZ) aims to invest in companies that may benefit from increased use and adoption of robotics and artificial intelligence (AI). These companies may include those involved in autonomous vehicles, non-industrial robots, and industrial robotics and automation.

Some of the best AI ETFs 2024Some of the best ETFs 2024

Wait for the Open AI IPO

A lot of profitable private businesses want to go public with an IPO in order to acquire more money to support their expansion. OpenAI does not, however, seem to be planning to go public.

A private firm can enter the public stock exchange by offering its shares to the public for the first time through an initial public offering (IPO). Potential investors are informed of the company's financials and business plan during an IPO. After the shares are offered to the public, the securities market establish the company's value. IPOs give firms access to capital and give investors the chance to purchase shares, but they also come with requirements that companies must follow.  

Sam Altman, the CEO and co-founder of OpenAI, stated in June 2023 that his business had no intention of going public. That probably won't alter while he's in charge of the business. He was briefly let go by the firm in late 2023, but following a barrage of criticism, he swiftly returned to OpenAI.

This hesitation to go public is mostly due to two factors. Firstly, it appears that OpenAI does not now require more funding as Microsoft has committed to investing an additional $10 billion in the company in the first half of 2023. Second, the business worries that it might not be able to fully develop AI if it lists its shares on a public stock exchange.

Specifically, OpenAI is dedicated to creating artificial general intelligence (AGI) and AI super intelligence, which are technological advancements that surpass even the most intelligent human being in terms of intelligence and self-awareness. Altman stated, "When we develop superintelligence, we are likely to make some decisions that most investors would look at very strangely."

Its current organizational structure is a little unclear: OpenAI Inc., a non-profit organization, governs OpenAI Global, a for-profit company. With this organizational structure, OpenAI is able to compete with top for-profit tech businesses and draw in talent and funding while staying true to its objective of "ensuring that artificial general intelligence benefits all of humanity."

The $86 billion nonprofit organization is expected to bring in $2 billion this year. In the unlikely event that the parent firm chooses to spin off its profitable business, an IPO of epic proportions is to be expected. If it goes public, you'll require a brokerage account.

Should you invest in Open AI (Chat GPT)?

While there isn't a direct method for investing in OpenAI at present, many long-term investors might consider indirect options. Specifically, buying Microsoft stock could be a prudent choice if you want to benefit from OpenAI's innovations. No other stock is as closely connected to OpenAI.

Generative AI technology, such as OpenAI's GPT-4, is likely to be a game-changer. According to the global consulting firm McKinsey & Company, generative AI could have an annual economic impact of up to $4.4 trillion. This amount surpasses the GDP of every country except the United States, China, and Japan.

Investors should also consider purchasing other AI stocks that could benefit from the generative AI boom. For instance, Nvidia produces graphics processing units (GPUs) that are ideal for powering AI applications. Nvidia's GPUs could see strong demand even if an OpenAI rival, such as AutoGPT, ultimately achieves greater success. However, the downside to buying Nvidia is that its share price already reflects significant growth expectations.

You might also consider buying stocks of companies that are utilizing AI. For example, Salesforce (CRM 0.93%) has integrated with OpenAI to develop Einstein GPT, which generates content for customer relationship management functions. Another option is Atlassian (TEAM 1.63%), which has partnered with OpenAI to incorporate generative AI into its products.

Trading AI stocks

Buying AI stocks

Trading’ lets you speculate on the price of a stock or other financial asset rising or falling using derivatives like CFDs. If you want to take a position on AI stocks or ETFs without owning them directly, then CFDs might be for you.

Bear in mind that these are leveraged products, which means they enable you to get full market exposure for an initial deposit – known as margin. But, while leverage can increase your profits, it can also increase your losses.

Investing’ means that you’re taking direct ownership of something with the aim to benefit from prices rising. You’ll be able to invest in the shares of individual companies that are involved in the AI sector, or in ETFs to get broad exposure to AI.

Leverage isn’t available when you’re investing, so you’ll need to commit the full cost of your position upfront. While this could increase your initial outlay, it also caps your maximum risk with the amount of money you paid to open your position.

Conclusion

One of the pioneers in generative AI is unquestionably OpenAI. ChatGPT is still gaining more popularity day by day. OpenAI's technology has the potential to usher in a new era in which artificial intelligence (AI) is considerably more pervasive in practically every facet of civilization. Even while OpenAI is not directly investable, you can purchase the stocks of businesses that will benefit from its AI advancements.

Though AI is a fascinating field with countless investing opportunities, it's crucial to keep in mind that cutting-edge technology might lead to riskier investment choices. If you're new to the market, invest in AI as a modest percentage of a diversified portfolio and think about using an ETF rather than individual stocks. An easy diversity layer is provided by investing in an ETF, which exposes you to all underlying assets mentioned in the holdings list.

Free Resources

Before you start investing or trading AI stocks, you should consider using the educational resources we offer like CAPEX Academy or a demo trading account. CAPEX Academy has lots of free trading and investing courses for you to choose from, and they all tackle a different financial concept or process – like the basics of analyses – to help you to become a better trader or make more-informed investment decisions. 

Our demo account is a suitable place for you to learn more about leveraged trading, and you’ll be able to get an intimate understanding of how CFDs work – as well as what it’s like to trade with leverage – before risking real capital. For this reason, a demo account with us is a great tool for stock investors who are looking to make a transition to leveraged trading.

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FAQs about Open AI (ChatGPT)

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Cristian Cochintu
Cristian Cochintu
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Cristian Cochintu writes about trading and investing for CAPEX.com. Cristian has more than 15 years of brokerage, freelance, and in-house experience writing for financial institutions and coaching financial writers.