Javier Pastor
Senior WriterComputer scientist turned tech journalist. I've written about almost everything related to technology, but I specialize in hardware, operating systems and cryptocurrencies. I like writing about tech so much that I do it both for Xataka and Incognitosis, my personal blog.
A group of investors, led by Tesla CEO Elon Musk, has made a $97.4 billion offer to purchase the nonprofit organization that oversees OpenAI. Unsurprisingly, this has created some new drama in the AI world.
Sam Altman and Elon Musk at odds. OpenAI CEO Sam Altman responded to the bid on X. He joked, “no thank you but we will buy twitter for $9.74 billion if you want,” indicating that he sees very little value in the social media platform. Musk later called Altman a “swindler” in a reply.
What is OpenAI worth? In October, OpenAI closed a massive $6.6 billion investment round. According to experts, the funding increased the company’s valuation to around $157 billion. However, how much OpenAI is worth might not be the most important question here.
SoftBank is looking to make a massive investment. Recent reports indicate that SoftBank plans to invest an extraordinary $40 billion in OpenAI. This could boost the AI startup’s valuation to a staggering $260 billion. Musk’s bid seems relatively low in comparison.
Complicating matters for Altman is a goal. While analysts suggest that Musk’s offer may not progress, they point to a different underlying reason. Altman is attempting to turn OpenAI from a nonprofit organization to a traditional for-profit company. This is a quite complex process.
A complex structure. To “separate” from the nonprofit segment, Altman and his team have to either compensate the controlling nonprofit or give it a minority stake in the company. According to The New York Times, OpenAI employs more than 2,000 people, while the nonprofit that oversees it has only two employees and $22 million in cash reserves. Musk’s interest lies in acquiring the nonprofit to gain the legal control that this organization currently holds over OpenAI.
How much is the nonprofit worth? This may be the key question. While no official valuation has been provided, some estimates place its worth at around $40 billion. Musk is aiming to achieve this with his offer. The proposed buyout could pressure the for-profit segment of OpenAI to invest more in achieving its independence from the nonprofit and completing the desired transition initiated by Altman.
Background. Analysts suggest that OpenAI would need to grant the nonprofit a 25% stake for it to relinquish control. If OpenAI’s valuation–including SoftBank’s hypothetical investment–is estimated at $260 billion, that would place the nonprofit’s valuation at around $65 billion. This figure is significantly lower than Musk’s offer, which may complicate matters for Altman in determining the nonprofit’s fair market value.
The AI war. Following his inauguration in January, President Donald Trump endorsed the Stargate Project, which aims to invest $500 billion in multiple AI data centers across the country. Trump described this initiative as “the largest AI infrastructure project by far in history.” OpenAI and SoftBank are the main supporters of the project, which Musk has criticized. This may have strained the previously good relationship between Trump and Musk.
The Musk-Altman war. In August 2024, Musk sued Altman and OpenAI, continuing his long-standing effort to compete with OpenAI through his startup, xAI. Musk has successfully completed investment rounds, valuing his startup at $50 billion, which is more than Ford’s. He also owns a data center and a massive supercomputer called Colossus. The tension between Musk and Altman dates back to their shared history as co-founders of OpenAI, but Musk left the organization too early.
Where’s Grok 3? Although xAI has considerable resources, it appears to be lagging behind its U.S. and Chinese competitors. The launch of DeepSeek R1 has energized the market, particularly in reasoning models. In the meantime, xAI is still reportedly working on Grok 3, an upgraded version of its traditional chatbot. There are no updates on whether the company is developing a competitor to DeepSeek R1 and OpenAI’s OpenAI o1. There’s also no information about its progress on alternatives to AI agents like OpenAI’s Operator.
Image | Levart_Photographer
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