EXECUTIVE SUMMARY:
The dawn of a new digital era? Since its launch in November of 2022, the scary-smart AI chatbot known as ChatGPT has produced widespread excitement about the transformative power of generative artificial intelligence technology. For some, using the technology feels like magic, as human-like responses that seem plausible, actionable and individually customized appear on screen.
More than 40% of professionals have used the technology to improve work processes or products, and nearly 70% have done so without telling their bosses. ChatGPT can help write emails, schedule meetings, and sift through numbers, among other things. Beyond the office, the technology may be able to assist blind people, help Americans return their taxes, and otherwise remove the thinking work from certain tasks.
Retail investors are clamoring to put money into OpenAI, the company behind ChatGPT, and are afraid of missing out. But is it actually possible to invest in OpenAI? Here’s what to know.
Key insights:
OpenAI’s primary share holder is its own non-profit research laboratory, called OpenAI Inc.
OpenAI is currently a privately held company. Until the company has an initial public offering (IPO), shares are unavailable for public purchase.
However, there is a convenient workaround allowing retail investors to gain indirect exposure to OpenAI and the company’s technology.
Investing in OpenAI
As noted previously, at this time, individuals can only invest in OpenAI in an indirect way. Here’s what that can look like:
In January of 2023, Microsoft announced a $10 billion investment in OpenAI. As a result of this deal, the GPT-3 technology is now licensed to Microsoft, exclusively.
Microsoft anticipates incorporating the GPT-3 tech into its search engine, known as Bing, which functions as a competitor to Google’s search engine.
Eager and savvy investors can invest in Microsoft to gain indirect exposure to OpenAI.
But you don’t necessarily need to purchase Microsoft as an individual stock in order to gain portfolio exposure. In fact, depending on your portfolio composition, you may already be invested…
For instance, if you’re already investing in S&P 500 index funds, you’re already indirectly investing in Microsoft, and by extension, OpenAI.
Well, there’s a super secret backdoor…but it might also be a rabbit hole
Theoretically, if you’re really committed to AI and willing to make a tremendous bet, you could become a VC investor (kind of) and invest in OpenAI through fractional shares. A handful of FinTech startups have recently made this process fairly straightforward for retail investors.
Should you invest in OpenAI?
Well, that’s really a personal decision. What we can say is that having Microsoft (MSFT) in your portfolio may (or may not) help you achieve your financial goals. A portfolio analysis tool can potentially help you evaluate your asset allocation and help you make a decision.
It is possible to purchase individual shares of MSFT via a brokerage account. Alternatively, you can invest in index funds or mutual funds that provide a basket of securities, including MSFT and by extension OpenAI.
More information
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A quick reminder: All investors should perform their own diligence, assess their own risk tolerance, invest responsibly, and ensure that investments align with financial goals. This article is not an endorsement of any specific investment strategies, companies, or financial products. In addition, past performance of stocks is not necessarily indicative of future results.
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