Wall Street analyst Gene Munster says skepticism around OpenAI’s soaring valuation misses the central variable that matters most: growth.
In a new blog post, the Deepwater Asset Management co-founder says investors are looking at OpenAI and are concerned about its rapid rise in valuation, triggering calls of speculative excess.
“OpenAI’s skyrocketing valuation naturally invites doubt. The company’s valuation surged from roughly $30 billion in 2022 to about $500 billion this fall and is expected to reach $830 billion by the end of March (WSJ), representing roughly a 27x increase over four years. This jump has coincided with feverish excitement around AI, along with rising investor concerns that expectations and valuations may be running well ahead of reality.”
But Munster notes that the ChatGPT creator’s revenue trajectory puts it in a category of its own. According to the analyst, OpenAI is projected to witness 100% revenue growth over the next two years, massively outpacing other high-growth tech firms. Munster highlights that CrowdStrike, Shopify, and ServiceNow are expected to grow 15% to 30% next year, well below OpenAI’s trajectory.
“Where OpenAI stands out is its growth rate. We estimate OpenAI’s revenue is on track to increase from about $4 billion in 2024 to about $15 billion in 2025, and then to $35 billion in 2026, and $70 billion in 2027. No public tech company at $35 billion scale is growing anywhere near that fast… From that lens, OpenAI’s premium valuation seems rational, given it’s growing far faster than almost any comparable company.”
But when compared against the Mag 7 stocks, the analyst says OpenAI’s valuation looks less attractive.
“The Mag 7 are currently trading at 9x CY26 revenue, compared to OpenAI at 24x. OpenAI is growing at 100% compared to the Mag 7 at 16%. If we fast forward to 2027 multiples, OpenAI is trading at 12x compared to the Mag 7 at 8x.”
Munster closes by emphasizing that the valuation debate hinges entirely on execution.
“The bottom line: We believe OpenAI can grow around 100% annually over the next several years. If that proves true, an $830 billion valuation looks objectively cheap given its growth rate. If it doesn’t, the valuation is going lower.”
While Munster says OpenAI’s future depends on execution, the firm’s CEO believes the critical factor moving forward is compute. In a recent interview, Sam Altman said OpenAI is on a “very steep growth curve of revenue,” but its potential to grow is being hampered by compute constraints.
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