OpenAI Is Worth More Than Exxon

The value of AI leader OpenAI jumped to $500 billion based on stock sales by employees that total $6.6 billion. That makes OpenAI more valuable than oil giant Exxon Mobil Corp. (NYSE: XOM), which is one of the most valuable companies in the world. However, one key difference is that OpenAI’s revenue this year is expected to be $16 billion, while its losses are expected to exceed $8 billion. Projections have Exxon’s revenue at approximately $345 billion in 2025, and its net income will exceed $30 billion.

The comparison between Exxon and OpenAI is not unlike the comparison between Tesla Inc. (NASDAQ: TSLA) and Ford Motor Co. (NYSE: F). Tesla’s market cap is $1.53 trillion, and Ford’s is $48 billion. Tesla makes money. Despite Ford’s overall large profits, it has spent tens of billions of dollars on building its electric vehicle (EV) business and will lose another $5 billion on it this year. Tesla will sell 1.6 million EVs in 2025. Ford will sell fewer than 100,000 in the United States. It has virtually no EV sales outside the country.

The valuations of the four companies are based on a single assumption. Exxon and Ford are mired in the 20th-century economy. Tesla and OpenAI are among a select group of companies expected to grow at extraordinary rates over the next decade.

The two future-focused companies have a major challenge. One is how they fund growth. OpenAI is expected to lose $115 billion through 2029. Tesla will invest heavily in its new self-driving technology, artificial intelligence (AI) advances, and robotics business. While Tesla generates small revenue from its self-driving software, it makes no money from its latest programs.

Despite the shaky China sales and EV sales problems in the United States, Elon Musk has convinced many investors that Tesla is not just a car company. That means its $1.52 trillion market cap is based chiefly on developments that may not happen. Ford is one of three companies that dominate the combustion-engine car business in America, which is likely to be highly successful for the years, particularly now that the federal government has eliminated the $7,500 EV purchase tax credit. Gasoline-powered cars likely will outsell EVs in the U.S. for years, and possibly for another decade.

Projections for the year of peak oil, when the world’s use of crude oil begins to decline, have been pushed out to 2040. One reason oil will be in demand for the next several years is that there could be an energy deficit worldwide, primarily due to the amount of electricity AI server farms consume.

Musk’s xAI Now Worth $200 Billion

Some investors see the value of OpenAI and Tesla as a bubble. People and companies will utilize AI, but they may not be willing to pay significantly for AI-based products. At least Ford and Exxon can say they are among the world’s largest companies based on revenue, and their business models will likely survive (albeit eventually fading) for decades to come.