The deal, still in early discussions, would give current and former employees an opportunity to cash out shares worth several billion dollars ahead of any initial public offering.

If finalised, the proposed valuation for OpenAI would be a sharp jump from the company’s existing $300 billion figure, stressing its rapid revenue growth and also the escalating race among global tech giants to attract and retain AI talent.

The surge has been driven largely by ChatGPT, OpenAI’s flagship product, which now has around 700 million weekly active users, up from 400 million in February and four times higher than last year. The company’s paying enterprise clients have grown to 5 million, compared to 3 million just two months ago.

Financially, OpenAI’s annual recurring revenue has climbed to $13 billion, from $10 billion in June, with expectations to hit $20 billion by year-end. The company doubled its revenue in the first seven months of the year and is expanding its product reach even as it navigates corporate changes.

The share sale discussions follow OpenAI’s recent $8.3 billion funding injection from investors including Dragoneer, Andreessen Horowitz, Sequoia, and Fidelity. 

This forms part of a $40 billion fundraising round led by Japan’s SoftBank Group, which has until the end of the year to complete its $22.5 billion commitment. The remainder has already been taken up at a $300 billion valuation, the source said.

The development is similar to private share sales by other high-growth technology firms such as ByteDance, Databricks, and Ramp, which have used such transactions to update market valuations and reward long-standing employees. 

Existing OpenAI investors, including Thrive Capital, are said to be in talks to participate in the sale. Thrive declined to comment.

Competition for AI talent is at an all-time high. Meta, for example, is investing billions in Scale AI in a bid to lure its 28-year-old CEO, Alexandr Wang, to lead its new superintelligence division. Across the industry, lucrative compensation offers are becoming the norm for top engineers and researchers.

OpenAI, meanwhile, is preparing for some structural changes. Plans are underway to move away from its capped-profit model, potentially clearing the way for a public listing. Chief Financial Officer Sarah Friar said in May that an IPO would happen only when both “the company and markets were ready.”

The company has also taken steps to reconnect with the open-source community, releasing open-weight models for the first time since 2019, a strategic move to counter competitors such as Anthropic.

A $500 billion valuation would place OpenAI among the most valuable privately held technology companies in history, rivalled only by firms like ByteDance and SpaceX. 

For the AI sector, it would be another sign that the biggest players are not limited to building powerful systems but are also securing the financial firepower to dominate the global market for years to come.

Chief Financial Officer Sarah Friar revealed in an interview with The Financial Times that OpenAI is considering the introduction of advertisements while ensuring a measured and user-focused approach. 

“We aim to be thoughtful about when and where we implement them,” Friar stated, noting the possibility of ads to supplement its revenue stream.

OpenAI has been recruiting advertising talent from tech giants such as Google and Meta. Aimed at strengthening its place in the AI space, hires include Shivakumar Venkataraman, former head of Google’s search advertising team, who joined as vice-president earlier this year, and Kevin Weil, chief product officer, known for his experience at Instagram and X (formerly Twitter). 

Friar described Weil’s leadership as a key advantage in scaling through the difficulties of advertising integration.

OpenAI’s exploration of advertising aligns with strategies employed by companies like Google and Meta, which have successfully leveraged ad-based models to monetise their platforms. 

While OpenAI has not committed to implementing advertisements, the discussions reveal the need to address the escalating costs of developing advanced AI technologies.

Currently valued at $150 billion, the company’s expenses are outpacing its revenues even with commendable growth. 

OpenAI’s annual revenue has surged to approximately $4 billion, driven by the success of its flagship product, ChatGPT, which has over 250 million weekly active users. However, the company anticipates burning through more than $5 billion in cash annually as it scales up its AI capabilities.

A portion of OpenAI’s income comes from access to its application programming interface (API), which enables developers to integrate its technology into their applications, as well as subscriptions for individual and enterprise use of ChatGPT. 

However, these streams are limited by lower profit margins compared to consumer-facing products or advertising models.

Experts note that smaller competitors, such as Perplexity, are already experimenting with ads in their AI-powered search engines, prompting OpenAI to evaluate whether a similar approach could enhance its long-term viability.

Even with the possible benefits of advertising, Friar acknowledged its inherent risks, including sensitivity to economic cycles and the challenge of balancing user satisfaction with advertiser demands. 

She emphasised that OpenAI is prioritising existing revenue opportunities while remaining open to exploring ads in the future. “There’s a lot of low-hanging fruit in the way we are doing things,” she noted.