Name: OpenAI finalizes recapitalization plan
Uploaded: 2025-10-28T16:11:56.268Z
Duration: 5 min 17 s
Description: OpenAI has completed a significant recapitalization, transitioning from a not-for-profit to a public benefit corporation. As part of the restructuring, the OpenAI Foundation will hold a substantial equity stake in the for-profit entity, valued at about $130 billion.

OpenAI has completed a significant recapitalization, transitioning from a not-for-profit to a public benefit corporation. As part of the restructuring, the OpenAI Foundation will hold a substantial equity stake in the for-profit entity, valued at about $130 billion.

The release of Open AI's ChatGPT has accelerated the development of artificial intelligence and warnings about its impact on society.

Rise of AI

OpenAI has completed a significant recapitalization, transitioning from a not-for-profit to a public benefit corporation. As part of the restructuring, the OpenAI Foundation will hold a substantial equity stake in the for-profit entity, valued at about $130 billion. Microsoft, a key early supporter, now owns 27% of OpenAI on a diluted basis, with its stake valued at $135 billion, placing OpenAI's total valuation around $548 billion.

The agreement extends Microsoft's intellectual property rights for OpenAI models and products through 2032, including those developed after the achievement of artificial general intelligence (AGI). The deal also includes a $250 billion commitment for OpenAI to use Microsoft Azure services. Ongoing litigation from XAI and Elon Musk challenges the restructuring, but the recapitalization marks a major milestone in OpenAI's evolution and its ongoing partnerships within the technology sector.

OpenAI finalizes recapitalization plan

Guys, you know, we in the last moments have gotten a couple of press releases from both OpenAI and Microsoft that are detailing the recapitalization that we've been keeping a close eye on of OpenAI. Remember, of course, one of the most important companies in the world, frankly, is OpenAI, but it's a private company. It has been a not-for-profit and has been in the midst of a recapitalization to change that, essentially, and to become a public benefit corporation, as well as then having the OpenAI Foundation hold a significant amount of its equity. And so we're starting to get or have gotten some numbers about that because this has been a significant negotiation that has been going on for some time between Microsoft, which our viewers, of course, well know, was the early and most important supporter of OpenAI and the company itself as it seeks to recap and to become, essentially, a more focused and for-profit corporation. Here's some numbers. Microsoft is going to own 27% on an as-converted diluted basis, inclusive of all owners, that's employees, other investors, the OpenAI Foundation. So they were 32.5% until a recent round, but there are 27% and that is being valued at $135 billion from Microsoft. By the way, just a quick math in terms of what that is, that would value overall OpenAI at about $548 billion. They say the agreement preserves key elements that have fueled the successful partnership between OpenAI and Microsoft. Of course, remember, Microsoft was the money behind helping them create the frontier models and so many of the things that they did in the earliest days. Since then, as we know, OpenAI has gone everywhere to raise money. SoftBank has become a very important supporter. They have deals with, well, NVIDIA, potentially as much as $100 billion and then so much else. Once AGI is declared by OpenAI, they say the declaration will now be verified by an independent expert panel. Microsoft's IP rights for both models and products are extended through 2032, now include models post-artificial general intelligence, what they say are safety guardrails as well. Remember, when they reached AGI previously, the IP was going to revert back to OpenAI. So now they've got it till 2032. I'm reading through a number of other things here as well. For its part, the non-profit now called the OpenAI Foundation, Jim, will currently hold equity in the for-profit valued at about $130 billion. So it immediately becomes one of the best resource philanthropic organizations in the world. Now, one of the key questions is, does this put OpenAI in a path to potentially one day go public? Yes, I think it does. I think because there are a lot of people who are saying, listen, unless there's some clarity this quarter about what Microsoft really owns and doesn't own, then maybe this whole thing is just too murky. Now, I think they're really ahead of the quarter. Explained a lot. Now, David, this $250 billion of Azure services that OpenAI has contracted with, it's incremental. Well, people say, oh, I see you get, Microsoft owns this, and then they get the money back. I mean, you know, this circular deal, I don't think it's true. I think this is a big win for Microsoft. I also think it's big because Google didn't get this, and now people are going to say Amazon Web Services is behind again. So it is very interesting, the $250 billion that they've got. Yeah. You know, you're right. Purchase an incremental $250 billion of Azure services. Yes, without a doubt. Very important part of this. Carl, going through it again, the release here to share some of the more important parts. Obviously, we've been waiting for this. I do want to point out there is still that lawsuit out there from XAI and Elon Musk that is challenging the ability of the company to do this restructuring. If, in fact, they were successful in pursuing that litigation and a judge agreed and said, you can't do this, it would throw into chaos much of what's been done. So just for people to be aware, that's still out there. Kind of like SCOTUS and tariffs. They're huge binary unknown. The other big news regarding at least chat is PayPal today becoming the first wallet to work in agentic commerce. He introduced us to Alex Chris. I've been waiting and waiting. Now Alex Chris doing some great stuff. And again, chat, GPT, I keep saying they're in every vertical. They want to be your wallet. Now Apple had some good wallet news out on Friday. They want to be the destination for any sort of advertising that you want to do. They are really coming in on verticals that people to recognize have been other companies. Look, if I were Meta, they could be in Meta's vertical. And I think they're a very competitive guy, but they have to address it. Microsoft will open up near $3 from an all-time high off of this, which is really incredible because no one expected anything until they report. Should I use chat GPT for my math or for our math? But it's still a half a trillion market cap or market cap value. It doesn't have a market cap at OpenAI. So disregard. That seems to be the Sarah Fryer trying to get me.

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OpenAI finalizes recapitalization plan

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