The race to capitalize on the artificial intelligence boom could soon get even more exciting. With OpenAI confidentially filing for an initial public offering, investors are already looking for the best ways to profit from what could become one of the largest and most anticipated AI IPOs (initial public offerings) in history. While the company has yet to announce a timeline for its market debut, growing excitement around OpenAI, Anthropic, and SpaceX is fueling renewed interest in IPO-focused stocks and exchange-traded funds.
As noted by CNN, “OpenAI was last valued at $852 billion after raising $122 billion in March, but it’s faced pressure to demonstrate it can generate the cash to match that valuation.”
OpenAI’s IPO plans come just days before SpaceX is expected to launch its own public offering in a deal that could raise a record $86 billion and value Elon Musk’s aerospace and AI empire at roughly $1.78 trillion. Meanwhile, Anthropic, the developer of the Claude chatbot, disclosed last week that it had also confidentially filed for an IPO. In its most recent private funding round, Anthropic reached a valuation of $965 billion—surpassing OpenAI’s valuation for the first time—as the company continued to post rapid revenue growth.
While waiting for a direct opportunity to buy into this potential IPO is one approach, investors are turning to stocks and ETFs already benefiting from the current surge in IPO enthusiasm.
A Smart Way to Play the OpenAI IPO Trend
With an expense ratio of 0.61%, the First Trust US Equity Opportunities ETF (NYSEARCA: FPX) tracks hot IPOs, giving investors access to new stocks during their initial, most crucial days on the market. By buying it, not only can you avoid paying gobs of money for IPOs that may or may not work out, but you’re also being exposed to multiple hot IPOs at the same time at a lesser cost.
Even with its share of high-profile IPO disappointments, FPX has delivered strong long-term gains, climbing from around $11 in 2009 to recent highs near $190. The key advantage is simple: whether individual IPOs succeed or fail, the overall excitement and capital inflows into the IPO market tend to support the ETF over time.
Another option for IPO exposure: the Renaissance IPO ETF
With an expense ratio of 0.6%, the Renaissance IPO ETF (NYSEARCA: IPO) provides “investors with the largest, most liquid US-listed newly public company stocks in one security, reducing the risk of single-stock ownership while avoiding overlap with major core indices for optimal diversification across markets and time,” as noted by Renaissance Capital.
Since November 2023, the ETF has rallied from a low of about $30 to its current price of $55. From here, we’d eventually like to see the ETF rally back to $60 a share.
Another route: the Fundrise Innovation Fund
At the moment, AI accounts for about 44% of the Fundrise Innovation Fund (NYSE: VCX) portfolio and data infrastructure 23%, with the remainder invested in fintech, aerospace, gaming, software, and healthcare. The strong demand for VCX comes as its top holdings, such as Anthropic, Databricks, and OpenAI, are expected to go public this year.
A Safer Way to Trade OpenAI
As excitement builds around a potential OpenAI IPO, investors don’t necessarily have to wait for the company to begin trading publicly to gain exposure to the trend.
IPO-focused ETFs and funds with stakes in leading private AI companies offer alternative ways to participate in the growing enthusiasm surrounding artificial intelligence and new market listings. While every investment carries risk, vehicles such as FPX, the Renaissance IPO ETF, and the Fundrise Innovation Fund provide diversified exposure to some of the companies and themes driving today’s AI revolution.
These investments could be well-positioned to benefit both the short and long term.
