Gerstner questions why OpenAI took a dilutive $10B round at roughly $30B valuation.
“what was their motivation to take such a dilutive round, know, the 10,000,000,000 at what was the valuation at 30?”
Gerstner says GPT has become the default verb for AI, not Google's Bard.
“Do you bard or do you chat GPT? GPT has become the default verb for all things AI.”
Gerstner says OpenAI at $90 billion valuation may be overinflated like 2021 stocks, but AI remains profound.
“OpenAI at $90,000,000,000 may be ahead of itself just like we saw stocks get ahead of themselves in 2021, but it doesn't mean that AI itself is is not gonna be profound.”
Gerstner says Google made a mistake letting OpenAI go first despite having the technology and capabilities.
“And to relinquish that spot by letting OpenAI go first, when you had the technology, you had the supercompute, you had the capabilities to release that product, I think was a mistake.”
Gerstner says OpenAI at $85 billion with capped upside on common stock creates unfavorable risk-reward distribution.
“if you're asking me to invest at $85,000,000,000 to buy common stock that's capped on the upside, right? Now we have a deal.”
Gerstner would rename OpenAI to ChatGPT and focus entirely on consumer rather than enterprise business.
“On the consumer side, which is where I get a lot more excited about OpenAI, is I say, You are the verb. I would rename the company ChatGPT.”
Gerstner views OpenAI's $85B valuation with capped upside as poor risk-reward given few companies exceed $100B durably.
“I can then plot a distribution of likely outcomes. How many companies have ever in the history of Silicon Valley been worth durably more than $100,000,000,000”
Gerstner says he was concerned a year ago that Microsoft's OpenAI partnership would cause Amazon customers to switch to Azure.
“A year ago, I was concerned and some others were whether or not Microsoft's early lead because of their partnership with OpenAI would cause a bunch of customers to leave Amazon and go to Azure in order to take advantage of the benefits of OpenAI.”
Gerstner predicts Anthropic models will match GPT-4 and 4.5 turbo quality in the near term.
“They're gonna have models which are every bit as good, you know, in the near term as chat GPT four and four point five turbo, etcetera.”
Gerstner says Amazon saw almost no customer churn to Azure despite Microsoft's OpenAI partnership advantage.
“A year ago, I was concerned and some others were whether or not Microsoft's early lead because of their partnership with OpenAI would cause a bunch of customers to leave Amazon and go to Azure in order to take advantage of the benefits of OpenAI. We didn't see that. We saw almost no customer churn.”
Gerstner says lead AI engineers at OpenAI and Google are rumored to receive millions annually in compensation.
“Take for example the recent competition for AI engineers in places like OpenAI and Google. Okay? Because venture backed private companies have to compete in an ecosystem against public companies.”
Gerstner calls out Sam Altman's rhetorical technique of minimizing smartphone market to hype AI potential.
“he juxtaposition to AI versus the smartphone market and then on the smartphone market as being small.”
Gerstner notes 64% of Fortune 500 companies are Azure OpenAI customers.
“64% of Fortune 500 customers are Azure OpenAI customers, which I thought was pretty extraordinary.”
Gerstner reports data company lamenting OpenAI sets pricing umbrella with no margin floor for models.
“I was talking to a large data company this week who's in the business of serving models, they were lamenting the fact that the pricing umbrella was set by OpenAI and there is no price, right? So that it's a much lower margin business than the traditional software business.”
Gerstner suspects OpenAI's integration with Apple is deeper than publicly disclosed, creating unequal competition.
“I suspect that the integration going on with OpenAI is deeper than what we heard about yesterday. Right? So I don't know that this is going to be everybody playing equal.”
Gerstner identifies AWS disadvantage risk if Microsoft's OpenAI access proves decisive and Amazon lacks equivalent.
“I think there is a lot of worry about, you know, if Microsoft has access to OpenAI and Amazon doesn't, is that going to put them at a disadvantage if open AI is a runaway winner?”
Gerstner reports OpenAI consumer product has 65% annual churn rate based on credit card data.
“At least for the cohorts that are old enough, the churn's about 65% annually. So they're only 35% retaining, which Sax had hinted at on all in.”
Gerstner reports OpenAI consumer product has 65% annual churn rate based on credit card data analysis.
“At least for the cohorts that are old enough, the churn's about 65% annually. So they're only 35% retaining,”
Gerstner estimates OpenAI's consumer business represents $2.1 billion of roughly $3-4 billion total revenue.
“It would imply that there are about 2.1 of the three four is the consumer business”
Gerstner says OpenAI's twelve-month retention rate is only 35 percent on paid subscriptions.
“On the $20 thing. But at twelve months, the retention even in OpenAI is like 35%.”
Gerstner estimates OpenAI consumer revenue at $2 billion, Anthropic $100 million, Perplexity $25 million from credit card data.
“And and I playing around with credit card data, I think OpenAI is about 2,000,000,000, Anthropix about a 100,000,000, and Perplexity is at like 25,000,000.”
“And and I playing around with credit card data, I think OpenAI is about 2,000,000,000, Anthropix about a 100,000,000, and Perplexity is at like 25,000,000. Yeah. Just I'm guessing”
Gerstner reveals OpenAI has only 35% retention at twelve months, questioning the durability of its business model.
“But at twelve months, the retention even in OpenAI is like 35%. So I doubt that anyone that is looking at that even at 2,000,000,000 feels great about that as a durable business model.”
Gerstner doubts ChatGPT and SearchGPT metrics will support reaching a billion users.
“I don't think we're seeing the metrics, you know, from ChatGPT and even SearchGPT that are going to lead to the breakout needed to get to that billion users.”
Gerstner calculates OpenAI's rumored $150 billion valuation represents 15 times forward revenue of roughly $10 billion.
“If that trajectory were to continue, right, that'd give you like roughly $10,000,000,000 next year. And the round's rumored to be at $150,000,000,000 so that's about 15 times forward revenue.”
Gerstner says OpenAI will do $5B revenue this year, $10B next, twice Google's IPO revenue.
“Reports are that they'll do 5,000,000,000 ish of revenue or run rate revenue this year, maybe going to 10,000,000,000 next year.”
Gerstner argues OpenAI's voice API demo showing GPT calling humans proves agents can already make reservations by phone.
“So why the hell can't my GPT just call up the Mercer hotel and say, Brad Gerstner would like to make a reservation.”
Gerstner says OpenAI has twice Google's IPO user count and trades at 15x forward revenue.
“average users, which we estimate is twice the amount Google had at the time of its And if you look at the multiple of the business, if you believe 10,000,000,000 next year it's about 15 times the forward revenue, which is about the multiple of Google and Meta at the time of their IPO.”
Gerstner says OpenAI's voice API can call humans on the telephone and place orders
“Well, I mean, the Easter egg that I thought got dropped last week is they did this event on, you know, their voice API. Right?”
Gerstner notes OpenAI reached $4.5 billion revenue faster than Google or Meta, justifying larger fund sizes.
“OpenAI got to, you know, $4,500,000,000 of revenue in a fraction of the time it took Google and Meta.”
Gerstner argues OpenAI could 2-3x ChatGPT users without model improvements since consumers barely use current capabilities.
“OpenAI could double triple the number of users of ChatGPT with frankly not making any improvements in the core model because consumers today barely scratch the surface on core model capabilities.”
Gerstner argues regulation prevents retail investors from accessing OpenAI and Uber early stage investments.
“I think this is a shame because now because of a lot of this regulation, small retail investors don't get a shot on goal on investing in open AI early.”
Gerstner reports Sam Altman said OpenAI has been on wrong side of history on open source.
“Sam said, yes. We are discussing. I personally think we have been on the wrong side of history here, and we need to figure out a different open source strategy.”
Gerstner cites CoreWeave's $12 billion OpenAI Stargate deal and $3 billion ServiceNow acquisition as evidence deals are happening.
“so two quick things. Number one, CoreWeave announced yesterday a $12,000,000,000 deal with OpenAI on Stargate. Those things are getting constructive. We're investors there.”
Gerstner cites CoreWeave's $12 billion OpenAI Stargate deal announced yesterday as evidence AI buildout continues.
“CoreWeave announced yesterday a $12,000,000,000 deal with OpenAI on Stargate. Those things are getting constructive. We're investors there. I I can tell you those things are getting built.”
Gerstner says OpenAI's $150 billion round with 10 investors created a dream IPO cap table, calling it a private IPO.
“If you looked at that, the cap table for the 10 investors in that round, it would be a dream day one IPO cap table for any company that wanted to enter the public markets.”
Gerstner says OpenAI's $10B raise at $150B valuation is essentially public but excludes retail investors.
“You know, it's just nomenclature to not call that public. The problem with it is, the only people who get access to that are accredited investors, and retail investors are completely cut out.”
“OpenAI made a lot of sense to us, you know, they just reported last week over 400,000,000 weekly active users, I think over 700,000,000 monthly users growing fast, etcetera.”
Gerstner reports OpenAI will exceed $11 billion in revenue this year per recent CNBC disclosure.
“OpenAI, you could see the pacing from the launch of their first consumer product relative to Google and Meta. Sarah just talked on CNBC last week, this year will be over $11,000,000,000”
“OpenAI, you could see the pacing from the launch of their first consumer product relative to Google and Meta.”
Gerstner says UAE announced five gigawatt AI campus with NVIDIA, OpenAI, Oracle, totaling 2.5 million GPUs.
“So in in Abu Dhabi, they announced a five gigawatt US AI you know, it's a UAE, US AI campus. It's an incredible architectural campus. It's in collaboration with NVIDIA and OpenAI and Oracle.”
Gerstner says OpenAI reached 400 billion annual searches eight years faster than Google did.
“I did I saw some analysis from my team this week will post that OpenAI reached, you know, 400,000,000,000 annual searches, eight years faster than Google.”
Gerstner says OpenAI reached 400 billion annual searches eight years faster than Google.
“I saw some analysis from my team this week will post that OpenAI reached, you know, 400,000,000,000 annual searches, eight years faster than Google. Right? So they're doing over a billion searches a day now.”
Gerstner states OpenAI is four times the size Google was at IPO in revenue and searches.
“OpenAI today is four times the size that Google was when it went public in terms of revenue, in terms of searches.”
Gerstner suggests OpenAI at $100 billion revenue could become the most valuable company in the world.
“What's your level of confidence that you guys will reach a 100,000,000,000 of revenue in the future and kind of be that you know AI defining company because at a 100,000,000,000 in revenue it seems to me that this company could be on a path to being the most valuable company in the world,”
Gerstner forecasts OpenAI could reach $5-10 trillion valuation as the AI winner in consumer and enterprise.
“right, 5 to $10,000,000,000,000 business in the fullness of time, which frankly would not surprise me for the winner in the age of AI, right? The winner in consumer and a big company and enterprise,”
Gerstner recounts Kevin Weil saying a trillion-dollar valuation would underwhelm him when joining OpenAI.
“I remember when you joined OpenAI and I asked you the question, can OpenAI get to a trillion dollars, right in total value?”
Gerstner characterizes OpenAI as shifting from regulatory advocacy to launching open source models.
“And now I think it's like more clear, the distinction that's being drawn. OpenAI is talking about launching an open source model here shortly,”
Gerstner argues OpenAI's global expansion mirrors Google's early 2000s strategy of competing worldwide without government permission.
“This is what Google did in the early two thousand. Right? And by the way, Google didn't have to go to Washington to get a permission or to get a license.”
Gerstner says OpenAI and Anthropic deals are bigger private IPOs than any public tech IPO in five years.
“I think these are bigger private IPOs than any public IPO done in the last five years in the tech market.”
Gerstner says OpenAI and Anthropic deals are bigger than any tech IPO in five years.
“I was just looking at these. I think these are bigger private IPOs than any public IPO done in the last five years in the tech market.”
Gerstner suggests OpenAI should consider blocking citizens of states with AI laws to force federal preemption.
“if states are going to pass these laws, Bill, then I wonder whether or not OpenAI or some other company should consider blocking the citizens of those states until it's resolved at the national level.”
Gerstner calculates OpenAI needs at least $150 billion revenue in 2030 to justify announced CapEx commitments.
“And so, like, the question is, Bill, how much revenue do they need in 2030 to justify $150,000,000,000 in capex? Well, I think you would need at least $150,000,000,000 of revenue.”
Gerstner says ChatGPT has over 1.5 billion monthly users and 800 million weekly users with rising engagement.
“I think chat GPT at one you know, well over a billion and a half monthly users, over 800,000,000 weekly users, and what most people don't talk about is the engagement. Engagement is going up.”
Gerstner says Lisa Su is betting 10% of AMD to OpenAI on the MI450 chip competing with NVIDIA.
“I'm gonna give 10% of my company to OpenAI, and I'm gonna bet that the m I four fifty is going to work, and it's gonna be competitive with NVIDIA.”
Gerstner calculates OpenAI could IPO at a trillion dollar valuation at 10x $100 billion revenue, below Facebook's IPO multiple.
“if you guys went public at 10 times 100,000,000,000 in revenue, right, which would be I think a lower multiple than Facebook went public at, a lower multiple than a lot of other big consumer companies went public at, That would put you at a trillion dollars.”
Gerstner contrasts OpenAI's $13 billion revenue with its $1.4 trillion compute commitment over four to five years.
“OpenAI's revenues are still a reported $13,000,000,000 in 2025. And Sam, on your live stream this week, you talked about this massive commitment to compute, right? 1,400,000,000,000 over the next four or five years”
Gerstner states Microsoft has invested $13-14 billion in OpenAI for 27% ownership on a fully diluted basis.
“Microsoft started investing in 2019, has invested in the ballpark of $1,314,000,000,000 dollars into OpenAI. And for that, you get 27% of the business ownership in the business on a fully diluted basis.”
Gerstner breaks down OpenAI's compute commitments: $500 million to Nvidia, $300 million to AMD and Oracle, $250 billion to Azure.
“with, you know, big commitments, 500,000,000 to Nvidia, 300,000,000 to AMD and Oracle, $250,000,000,000 to Azure.”
Gerstner notes OpenAI's nonprofit is capitalized with $130 billion in stock, making it one of the world's largest.
“The nonprofit is already capitalized with a $130,000,000,000, a $130,000,000,000 of OpenAI stock. It's one of the largest in the world out of the gates. It could end up being much, much larger.”
Gerstner argues $100-200B annual capex is responsible if OpenAI hits $100-200B revenue in 2028-29.
“Now if they're doing a 100 to 200,000,000,000 in revenue in 2829, then now we're in the zone of responsible.”
Gerstner clarifies Sam Altman expects OpenAI to exceed $100 billion revenue in 2027 or 2028.
“What Sam said multiple times on the pod and since is that he expects that they'll do over 100,000,000,000 in revenues in twenty seven or twenty eight.”
Gerstner argues that $100-200 billion in revenue by 2028-29 makes the capex spend responsible.
“Now if they're doing a 100 to 200,000,000,000 in revenue in 2829, then now we're in the zone of responsible.”
Gerstner breaks down OpenAI's $1.4 trillion capex: half borne by partners, remainder spread over five years.
“And if they're doing that and you spread the CapEx out, so we talked about 1,400,000,000,000, half of that's gonna be borne by their partners.”
Gerstner notes Altman tweeted OpenAI will exit the year at $20 billion in revenue.
“And he just said in his tweet that they're gonna exit the year at $20,000,000,000 in revenue.”
Gerstner reports Altman expects OpenAI to exceed $100 billion in revenue in 2027 or 2028.
“What Sam said multiple times on the pod and since is that he expects that they'll do over 100,000,000,000 in revenues in twenty seven or '28.”
Gerstner calculates partners will bear half of $1.4 trillion capex, leaving $600-700 billion spread over five years.
“And if they're doing that and you spread the capex out, so we talk about 1,400,000,000,000, half of that's gonna be borne by their partners.”
Gerstner reports Altman disclosed OpenAI is doing more than $13 billion in revenue.
“Sam came on the podcast. He was a little bit feisty. And he said, listen. We're doing more than 13,000,000,000 in revenue.”
Gerstner describes the market belief that AI tools can build CRM systems in an hour, threatening traditional software.
“I could tell it what I want, And I can literally have it build a customer relationship management system for my business in about an hour.”
Gerstner explains belief that Claude Code or OpenAI Codex can build CRM systems in an hour.
“There's a belief in the world today that I can just go to Claude Code or I can go to Codex at OpenAI.”
Gerstner predicts Anthropic and OpenAI will go public within twelve to eighteen months.
“Over the course of the next twelve to eighteen months, both Anthropic and OpenAI will come public would be my guess.”
Gerstner reports OpenAI added one billion dollars in API revenue in the last thirty days.
“OpenAI just announced last in the last few days that they've added $1,000,000,000 of API revenue in the last thirty days.”
Gerstner says OpenAI has over $40 billion cash and could raise another $70-100 billion for a fortress balance sheet.
“If these reports are true and they're gonna raise another 70 to 100,000,000,000, they would have over a 100,000,000,000 of cash on their balance sheet.”
Gerstner notes OpenAI has not built data centers while Microsoft, Oracle, CoreWeave, and SoftBank are building them.
“I haven't heard them break ground on any data center. I hear Microsoft building data centers, Oracle building data centers, CoreWeb building data centers, SoftBank building data centers.”
Gerstner notes OpenAI has not broken ground on any $50 billion data centers despite earlier expectations.
“Well, a year ago, people thought that they were gonna go build all these data centers that were gonna cost $50,000,000,000 a pop. I haven't heard them break ground on any data center.”
Gerstner predicts a robust back half if OpenAI hits $100 billion exit revenue and IPOs this year.
“If that revenue is on track, right, if they're headed to a $100,000,000,000 of exit revenue, you know, this year and and and have an IPO in the back half, I think you could see a really robust, you know, back half of the year.”
Gerstner reveals he's asking AI companies including OpenAI to voluntarily contribute 1% of shares to children's accounts.
“You know, we could set up a dedicated citizen pool where all the money could go that, and it goes directly to citizens.”
Gerstner advocates for voluntary 1% equity contributions from AI founders like Altman or Dario, citing Benioff model.
“The Trump administration has not done this. I hope they don't go down this path. I don't think they're going to go down this path.”
Gerstner says children will own shares in SpaceX, Google, and OpenAI as part of a decades-long journey.
“Owning some shares in SpaceX, in Google, in OpenAI, and in Thropping. And all these companies that we're talking about, this is step one. Remember, this is a journey that will last decades,”
Gerstner counters slowdown narrative, calling OpenAI and Anthropic the fastest growing companies at scale in history
“@IbrahimAjami Really? OpenAI & Anthropic are the fastest growing companies at scale in history. And cooking - arguably extending their research leads & gaining share of wallet / economics. Open source is also thriving which is grt - but not zero sum. 🧐”
Gerstner counters slowdown narrative, calling OpenAI and Anthropic the fastest growing companies at scale in history
“@IbrahimAjami Really? OpenAI & Anthropic are the fastest growing companies at scale in history. And cooking - arguably extending their research leads & gaining share of wallet / economics. Open source is also thriving which is grt - but not zero sum. 🧐”
Gerstner says Anthropic and OpenAI revenue scaling is 10x faster than Google and Meta at comparable scale
“@patrick_oshag Yes! Size of TAM only explanation for Anthropic & OAI revenue scaling - we have never seen anything like it. 10x faster than Google & Meta at comparable scale. 🎯”