Cathie Wood's Ark Invest Director Says ChatGPT-Parent Is 'Uniquely Positioned' To Lead AI Revolution But Has Advice For The AI Giant: 'Demonstrate Operational Excellence That Continues To Shine'

Frank Downing, the director of research for next-generation internet at Ark Investment Management, led by Cathie Wood, has touted ChatGPT-parent OpenAI as the leader of the AI revolution.

What Happened: In a blog post titled “OpenAI Investment Thesis” on Tuesday, Downing highlighted OpenAI’s innovation, rapid iteration on foundational models, and cost efficiency.

“We believe that OpenAI, with its advanced large language models (LLMs), is uniquely positioned to be a leader in the AI revolution,” Downing wrote.

He pointed out the company’s latest model, “o1,” which is designed to reason about problems before providing answers, as a significant breakthrough.

OpenAI’s success in image and video generation, as well as the rapid adoption of its products, were also noted.

Downing mentioned that within the first two months of its initial release in November 2022, ChatGPT gained 100 million users, marking the fastest application uptake of all time.

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While OpenAI leads, competitors like Anthropic's Claude and Meta Platforms, Inc.'s (NASDAQ:META) Llama models pose challenges, as does the democratization of LLM access through open-sourced models.

Alphabet Inc.’s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google, Apple Inc. (NASDAQ:AAPL), and Microsoft Corporation (NASDAQ:MSFT) are also rolling out AI agents for consumer and enterprise use cases.

“Given those threats, OpenAI must retain top talent and demonstrate operational excellence that continues to shine in the face of headline leadership departures,” Downing stated.

As of June 2024, OpenAI’s annualized revenue had reportedly tripled year-over-year to $3.4 billion.

“Were that trend to continue, the company's current pre-money equity value at $150 billion suggests that its forward enterprise value-to-sales multiple could land between those of Nvidia and Microsoft,” he stated.

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Why It Matters: Earlier this month, Tesla and SpaceX CEO Elon Musk accused OpenAI of unfair funding practices, after a report surfaced that the Sam Altman-led startup was asking investors for an exclusive funding arrangement.

However, Wood replied to the report saying that it is not true in their case at least.

Musk’s statement came after OpenAI closed its latest funding round, securing $6.6 billion, valuing the company at a jaw-dropping $157 billion.

This funding round saw big-name backers including Thrive Capital, Microsoft, ARK Invest and Nvidia Corporation.

Previously, Nvidia CEO Jensen Huang also credited OpenAI’s ChatGPT for the current wave of AI development. He also called OpenAI one of the most consequential companies of today’s time.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.