AI Giants Like OpenAI Not Ready for IPOs in 2025, Experts Reveal Revenue & Profitability Hurdles

Microsoft, Google, and Salesforce continue to dominate the AI conversation among public companies, aggressively promoting their AI advancements to eager investors. However, the spotlight also shines on emerging startups, raising questions about their readiness for initial public offerings (IPOs) and investor appetite.

Key Insights

• The IPO market is gaining momentum, yet top AI startups like OpenAI, Anthropic, and Inflection remain premature for public listings according to experts.
• Historical data suggests tech companies typically go public after a decade of operation and reaching approximately $100 million in revenue.
• Many AI startups pioneering innovations such as large language models (LLMs) are more likely acquisition targets for larger corporations than standalone IPO candidates.

Startups including OpenAI, creator of ChatGPT, Anthropic, and Inflection have attracted significant venture capital interest and government attention, with ongoing dialogues at the White House regarding their AI developments. Other players like Cohere and Hugging Face have raised substantial funding to advance their AI solutions.

While recent IPO successes from companies like Oddity Tech and Cava highlight a robust market, predicting which AI firms will successfully go public remains speculative. Jay R. Ritter, Finance Professor at the University of Florida, notes that tech IPOs generally require a solid foundation of revenue and operational maturity.

"Typically, companies need around $100 million in revenue and at least 10 years of operation before an IPO," Ritter explains. "However, the fast-paced AI sector might see earlier public offerings than usual."

Ritter's research indicates that profitable tech IPOs with revenues over $100 million yield a three-year buy-and-hold return of 65.1%, outperforming non-tech counterparts. Even unprofitable tech IPOs with similar revenues have shown better returns than unprofitable non-tech IPOs, underscoring strong investor interest.

Innovation Beyond AI Will Drive Tech IPOs

David Hornik, founder of Lobby Capital, emphasizes that while AI will be embedded in most future tech IPOs, pure AI companies must still prove solid economic fundamentals before going public.

"We are still in the early stages for companies whose core innovation is AI," Hornik states. Startups focusing on large language models tend to specialize in niche markets or leverage proprietary data, making them attractive acquisition targets rather than IPO candidates.

"AI IPOs will happen, but acquisitions will remain the dominant path," Hornik adds.

Both Ritter and Hornik agree that beyond rapid revenue growth, demonstrating profitability is crucial for AI firms aiming for public markets.

"The market now demands economic efficiency and a clear path to profitability, not just growth," Hornik notes. "Achieving scale and sustainable profits is a significant challenge for companies planning to go public."

Ritter advises patience, highlighting the value venture capitalists provide during product development phases.

"There's abundant venture capital and substantial value-add from quality investors," he says. "Companies should focus on maturing before facing public market pressures. Once venture capital influence wanes and maturity is reached, an IPO becomes viable."

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