OpenAI IPO Stumbling Block: Is Musk Killing This Capital Feast?

TradingKey - OpenAI plans to launch its IPO in the fourth quarter of 2026, with market valuation expectations nearing $852 billion. Although OpenAI's valuation once surpassed the trillion-dollar mark, capital markets have significantly marked down its valuation following a re-pricing driven by order uncertainty, internal governance disputes, Elon Musk’s lawsuit, and regulatory investigations. These events are now casting substantial uncertainty over the upcoming IPO.

Musk’s “Lawsuit of the Century”

Back in 2015, Musk and Altman co-founded OpenAI as a non-profit organization, pledging to "benefit all of humanity." However, as ChatGPT ignited the generative AI boom, massive R&D costs forced OpenAI to establish a for-profit subsidiary in 2019, eventually leading it toward a fully commercialized path.

In 2024, Musk sued OpenAI and Altman, alleging they reneged on their founding non-profit commitment by using a charitable facade to pursue commercial interests. On April 28, 2026, the case, dubbed the "trial of the century," officially opened in an Oakland federal court, with the jury entering final deliberations on May 18. Musk's demands are exceptionally aggressive: he is asking the court to rescind OpenAI’s for-profit restructuring, oust CEO Altman and his co-founders, and is even seeking damages exceeding $130 billion.

The litigation coincides with a critical period as OpenAI pushes toward an IPO. Analysis suggests that Musk chose to launch the lawsuit during the IPO window to exploit legal uncertainty and disrupt OpenAI’s listing momentum. The decision of the nine jurors will directly determine whether OpenAI must revert to a non-profit structure. Should Musk prevail, the IPO plans underpinned by the company's $852 billion valuation would be completely derailed.

Regulatory investigation

Although Musk’s lawsuit is interpreted by the market as a matter of commercial competition, the scrutiny from U.S. lawmakers and regulators carries more substantial weight. The Republican-led House Oversight Committee has launched an investigation into Altman, alleging that he leveraged OpenAI to facilitate partnerships with companies in which he has personal investments—such as the nuclear fusion firm Helion—suggesting a conflict of interest. The investigative list includes more than six separate items.

Meanwhile, attorneys general from six Republican states, including Florida, have co-signed a letter to the SEC, urging the regulator to strictly scrutinize OpenAI’s corporate governance before the company proceeds with an IPO.

Internal Resistance Within OpenAI

OpenAI's IPO plans also face internal governance friction.

CFO Sarah Friar has repeatedly stated that the company is not yet ready to go public, noting that organizational preparations are far from complete and expressing concern over the significant financial risks associated with more than $600 billion in computing infrastructure spending over the next five years. Furthermore, more than 600 employees cashing out $6.6 billion through the secondary market ahead of the IPO has been interpreted by some market participants as a bearish exodus.

Elon Musk's lawsuit, Congressional investigations, and internal resistance are adding increasing uncertainty to OpenAI's IPO. In an early May report, PitchBook senior analyst Harrison Rolfes assessed that OpenAI's original target for a Q4 2026 IPO was already overly ambitious, and the actual listing window has likely been pushed back to mid-to-late 2027.

However, can Musk's opposition alone truly lead to the market abandoning OpenAI? The answer is likely negative.

OpenAI is backed by the world's largest technological and financial powers, including Microsoft and Nvidia. Microsoft is the largest external shareholder with a 26.8% stake; Nvidia and Amazon are its primary computing power providers and shareholders. In the face of the collective interests of these AI titans, Musk's individual efforts amount to little more than noise, and the deep entanglement of this capital suggests they will not easily allow the IPO to be derailed.

Should Musk prevail in the lawsuit and OpenAI be forced back into non-profit status—a highly improbable tail event—the market would not only subject OpenAI to immediate sell-offs, but the resulting fallout would trigger risk-aversion across the entire AI value chain. This would impact OpenAI's partners and extend from computing power suppliers to cloud service providers, none of whom would escape a one-time market shock.

Concurrently, the market is largely betting on Musk losing the case. Even if the impact of the litigation delays OpenAI's IPO timeline until 2027, the AI sector's magnetism for capital remains robust. For market participants, the timing of the listing perhaps presents greater uncertainty than the certainty of the listing itself.