On Monday Elon Musk did something shocking.
It had nothing to do with anything he and his DOGE team did while trying to uncover government waste…
And it happened before Musk’s wild press conference with President Trump on Tuesday.
Somehow what he did on Monday was even crazier.
Because Elon Musk offered to buy OpenAI for $97.4 billion.
Was Musk just trolling OpenAI’s CEO Sam Altman with whom he has an adversarial relationship?
Altman seemed to think so. He responded to the bid by posting this message on X:
But according to the Wall Street Journal, Musk’s bid was real.
The WSJ reported that the offer is being backed by his AI company, xAI, and several longtime investors in his other businesses.
So what’s this all about?
Does Musk really think he has a chance to acquire OpenAI?
When it comes to Elon Musk, there’s always more to the story.
And I believe we can read quite a lot into this wild move.
Is OpenAI Worth $300 Billion?
Elon’s bid of $97.4 billion is for a majority stake in OpenAI. This seems to indicate that he thinks the company could be worth twice that amount.
Except OpenAI is already in talks to raise up to $40 billion in a new funding round.
If it secures this money, it would put the company’s valuation as high as $340 billion.
So what gives?
To understand what’s going on here, we need to untangle Musk’s often contentious history with OpenAI.
Musk founded the company along with Sam Altman and others back in 2015.
Originally, they set up OpenAI as a nonprofit with the mission to build artificial general intelligence (AGI) that was safe and beneficial to humanity. (Remember, AGI is the step between today’s AI and artificial superintelligence, or ASI.)
But Musk quit OpenAI in 2018 after an internal power struggle.
That left Altman in charge.
Soon after, in 2019, Altman led a restructuring of OpenAI that enabled the company to secure more funding so it could compete against better-funded tech companies.
The new setup created a for-profit OpenAI LP that the nonprofit OpenAI Inc controls.
This enabled the company to achieve a $100 billion valuation in just a few years…
And it also led Musk to file numerous legal complaints against OpenAI and Altman. He claims the company broke with its founding charter by trying to profit from its AI tools.
I believe that’s partly the reason behind Monday’s bid.
Because today Altman is trying to restructure the company into a Public Benefit Corporation (PBC.)
This would separate the nonprofit board control from its for-profit business and would make it a whole lot easier for OpenAI to go public for what could be a multi-trillion-dollar payday.
But it’s not yet clear if Altman and the nonprofit board have agreed on a transition price.
Marc Toberoff, an attorney representing Musk and the rest of the investors issued a statement saying:
If Sam Altman and the present OpenAI, Inc. Board of Directors are intent on becoming a fully for-profit corporation, it is vital that the charity be fairly compensated for what its leadership is taking away from it: control over the most transformative technology of our time. It’s time for OpenAI to return to the open-source, safety-focused force for good it once was. We will make sure that happens.
There’s an awful lot of bad blood between Musk and Altman.
And Musk’s $97.4 billion bid puts pressure on Altman and the board to go through a competitive bidding process.
That’s clearly what Musk wants.
But why make this bid at all?
Here’s My Take
Trying to figure out what’s going on in Musk’s brain is a fool’s errand…
But I’ll give it a shot anyway!
I acknowledge that part of the reason Musk offered this bid is that he doesn’t want AI — and eventually ASI — to be controlled by corporate interests.
He wants it to be open-source and decentralized just like his own xAI is.
Yesterday, Musk even reiterated that he’d pull the bid if OpenAI stays a non-profit.
As I’ve said many times, the race to ASI is the most important issue facing us today.
If OpenAI becomes a PBC, its nonprofit oversight will likely go away.
And if a for-profit OpenAI achieves ASI first, that means the company would have an incredible advantage over every other company in the world.
Maybe even every government in the world.
But ultimately, I think Musk is bluffing.
I don’t believe he thinks OpenAI is worth $300 billion.
DeepSeek has shown us that AI is rapidly becoming an open source commodity and the biggest gains will be in the application layer.
That’s how it played out with the internet when the biggest gains came from apps and not internet service providers.
Speaking of Elon Musk and big gains, don’t forget to check out this video I just filmed about how you can grab a pre-IPO stake in his most ambitious company.
In the video, I give you the name and ticker of a virtually unknown way into SpaceX.
Just click here for all the details.
Regards,
Ian King
Chief Strategist, Banyan Hill Publishing
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