Why OpenAI's IPO Will CRASH The Stock Market

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0:00Wall Street says OpenAI’s IPO will create trillionaires, but the truth is far darker.

0:05It could destroy your retirement. There’s a hidden flaw in their accounting… one

0:10that nobody’s talking about. Their revenue hit $25 billion in 2026 and they’re not done. They want

0:16a $750 billion to $1 trillion IPO. That’s 30 to 40 times what they actually generate in revenue.

0:24Everyone’s celebrating like it’s a tech gold rush. But this isn’t wealth… it’s a financial time bomb

0:30that could trigger chaos across Wall Street. The OpenAI IPO valuation is the kind of number

0:36that breaks every rule for a software company. It only works if they somehow

0:40capture the entire global AI market… and slash operating costs to almost nothing.

0:46Which is a long shot when you look at what it actually takes to build and run these systems.

0:50Normal software businesses get valued high because they're predictable cash machines with almost no

0:56extra cost for each new customer. OpenAI? It's the opposite story. There are huge infrastructure

1:03bills, massive power and cooling needs, and expenses that grow alongside every user. Investors

1:09are being asked to put up enormous money betting everything lines up perfectly in the future,

1:14even though the upfront spending and ongoing cash burn are massive. It's bold but going from today’s

1:20revenue to a trillion dollars? That’s a huge leap.

1:24The kind that only works on paper. Scaling to that level would require

1:28everything to go perfectly. And perfection is rare in tech. Think of it this way. A

1:33normal $500,000 house in a quiet suburb sits on a solid foundation, with reliable framing,

1:39maintenance you can count on, and plumbing that works. Everybody agrees on that price

1:44because the structure is proven and reliable. On the lot next door, someone is trying to

1:48sell a gleaming 100-story glass skyscraper for $8 million. From a distance it looks

1:54impressive. But close up, it’s all smoke and mirrors. There's no solid foundation,

1:59no steel skeleton anchored to bedrock. Every floor, every pane of glass, every person inside

2:05is resting on nothing that could possibly hold it. That’s exactly what venture capital is

2:10doing with AI. It’s holding

2:12the whole structure together… for now. The crushing load is the relentless, ballooning

2:17cost of AI infrastructure. Unlike regular software, AI doesn't ride the zero-marginal-cost

2:22wave. Every single time somebody types a prompt, real hardware has to spin up and burn through

2:28resources. A regular Google search or pulling a file from the cloud? It's a cheap database hit,

2:34pennies or less. Generative AI is a different beast entirely. When the model cranks out a legal

2:39brief or a high-res image, it does way more than fetching pre-existing data. It’s actually building

2:45something brand new from scratch. And that’s the big breakthrough. But now the question is

2:50how well and how far it can go. It’s a process that costs far

2:54more than humanity is ready for. And that money has to come from somewhere.

2:58OpenAI is bleeding cash at a pace that's hard to wrap your head around. Right now

3:03internal numbers show they're set to lose at least $14 billion in 2026… just to keep the

3:09lights on and the models running. The latest internal revisions are

3:13pushing that figure toward $25 billion - or even higher - as they ramp up compute power

3:19chasing the next breakthrough. And it doesn’t stop there.

3:22Annual cash burn could spike to $57 billion in 2027 alone. Add it all up, and cumulative cash

3:29burn through 2030 now sits around $665 billion. That’s over $111 billion more than they were

3:37forecasting just months ago. The reason?

3:40Infrastructure costs exploded way beyond what anyone planned. Power, custom data centers,

3:47endless chip upgrades, every piece costs more than expected. Every single dollar of revenue they're

3:52pulling in costs way more to generate. Growth doesn't fix this problem.

3:57It makes it worse. More users mean more prompts. More prompts

4:01mean more hardware spinning up… and that means bigger losses. It’s baked into the model. To stop

4:07the servers from going dark and give themselves 18 to 24 months of breathing room, OpenAI is counting

4:12on pulling in up to $60 billion dollars from this IPO. Not for world domination or new offices.

4:19For life support. If the cash doesn't appear,

4:22somebody has to write the check. So why would Wall Street willingly drain its own accounts to feed

4:27this machine? They know the burn numbers. They see the red ink piling up. Yet the plan is still

4:33to hand over $100 billion like it's no big deal. The stock market is basically a closed plumbing

4:38system. There's only so much money actually moving around in stocks, bonds, mutual funds,

4:43pension accounts and cash piles. The total amount doesn't magically grow just because

4:48someone wants more. Every dollar flowing into OpenAI shares comes from somewhere else.

4:53When they pull massive sums quickly, everything downstream starts to starve.

4:58The buyers who can actually write a $100 billion check aren't small-time traders or retail folks on

5:04apps. They're the giants. Sovereign wealth funds from the Middle East, government pension plans,

5:09the biggest mutual funds and endowments on the planet. They don’t sit on piles of cash. Idle

5:14money loses value to inflation. Every dollar has to stay fully invested, according to strict rules.

5:20To buy into the OpenAI IPO, these funds have to free up cash. They start with the

5:25assets that are easiest to move without creating chaos… like Apple. Apple stock is super liquid,

5:32with millions of shares trading every day. So the funds sell huge blocks, and the price starts

5:37sliding almost immediately. They do the same with other stocks like Tesla and Amazon. Managers

5:42rotate money out of proven e-commerce winners into the shiny new thing everyone is talking about.

5:48These aren't gentle trades. Heavy selling hits the tape.

5:52Prices dip. Forced rebalancing kicks in across portfolios. But that's only the first wave.

5:57The real damage comes next. Trading algorithms watch every tick,

6:01every spike in volume. When they see big blocks moving, they trigger automatic shorts to protect

6:06themselves. Market makers - the firms keeping the system flowing - sell more of the same stocks

6:11to stay neutral. Prices drop faster. Lower prices trigger stop-loss orders from regular

6:16investors who weren’t even planning to sell. More selling hits the market. Automated shorts

6:21pile on. Panic feeds on itself. And just like that,

6:25a vicious cycle starts rolling. Solid, profitable companies - the

6:28ones that actually make money year after year and back most 401(k)s and pensions - get sold

6:33off just to fund the newcomer. Money is pulled out of proven winners to cover the needs of a

6:38company that's losing billions. Tech doesn’t crash because earnings are weak. It crashes

6:44because the liquidity vacuum from IPO funding forces aggressive selling across the board.

6:49This is exactly why OpenAI's IPO will break the stock market.

6:53The funding mechanism itself destroys value everywhere else before the shares even start

6:58trading widely. The drain is real. And the supposed safety net everyone is counting on?

7:04That's next in the firing line. The liquidity drain is nasty. Big

7:09funds are dumping Apple, Tesla, Amazon to scrape together billions for OpenAI, that's going to hurt

7:14some prices short term. But the Magnificent Seven? Those are monsters. Microsoft and

7:20Nvidia alone sit on trillions in market cap with balance sheets that look unbreakable. They have

7:26deep pockets and massive cash flows. They'll just absorb the shock. Maybe even step in to

7:31backstop OpenAI if things go wrong. Big Tech has saved the day before.

7:36They'll do it again, right? Microsoft already poured billions

7:39into OpenAI and owns a huge chunk. Nvidia is tied to selling chips for exactly these

7:45kinds of AI builds. If anyone could handle a $100 billion liquidity suck without blinking,

7:50it’s them. On the surface, it makes sense. Except, that won’t happen.

7:55Microsoft and Nvidia aren't the cavalry riding in. They're chained to the same sinking boat OpenAI

8:01is on. The connections run so deep that when one starts taking on water, the others go down too.

8:07Take Microsoft first. They're not just writing checks as a side bet. They own roughly 27% of

8:13OpenAI, a stake worth about $135 billion. But that could double to $270 billion if OpenAI hits the

8:22trillion dollar valuation everyone's throwing around. They locked in a 20% cut of OpenAI's

8:27revenue through at least 2032. The part that really matters?

8:31How the money actually moves. A big piece of the original $13

8:35billion investment didn't come as clean cash. It came as Azure credits. OpenAI uses those

8:42credits to pay Microsoft back for renting servers. Money leaves Microsoft's pocket,

8:48circles right back in through cloud revenue. It's a closed loop that looks genius on paper.

8:53Until it isn't. Starting to sweat about AI wiping

8:56out your future earnings? Don’t panic, we’ve got the real story. Make sure to like, share,

9:00and subscribe before the algorithms do it for you. If the IPO faces real scrutiny and the valuation

9:06cracks… or if cash burn forces OpenAI to slash server usage,

9:10that whole loop breaks. Microsoft loses its single biggest Azure customer almost overnight.

9:16Those custom AI data centers Microsoft built aren't plug-and-play for regular cloud storage.

9:22They're specialized for heavy AI workloads, liquid cooling, massive power draw, custom setups.

9:28Revenue takes a direct hit. About 45% of Microsoft’s roughly

9:32$625 billion commercial backlog is tied to OpenAI commitments. When earnings come out,

9:39the link isn’t speculation anymore. One big renter gone, and billions in revenue are at risk.

9:45Nvidia's in the exact same trap… maybe even worse. Their data-center business exploded because

9:51frontier AI labs like OpenAI burn through insane volumes of chips. Over 80% of recent

9:57data-center growth comes from this small group of customers. Nvidia’s guidance assumes these

10:02massive orders will continue. By the end of 2027, they’re projecting $1 trillion

10:08in cumulative data-center revenue. Most of that rides on OpenAI and the other labs keeping the

10:14orders flowing. If the IPO forces a reality check and spending gets cut, those orders dry up fast.

10:21The trillion-dollar dream turns into a question mark overnight.

10:24The supposed lifeguards are drowning right alongside the guy they were supposed to save.

10:29No bailout. No absorption.

10:32Just shared collapse when the cash demands hit too hard.

10:35This isn't stopping at two companies. The Magnificent Seven - Apple, Microsoft, Nvidia,

10:41Amazon, Alphabet, Meta and Tesla - currently make up 33 to 35% of the entire S&P 500. One out of

10:48every $3 in the average American's 401(k) pension plan is sitting in those seven balance sheets.

10:55When OpenAI's cash drain creates the liquidity vacuum we mentioned earlier,

10:59the foundation starts cracking. The funds see the risk early and start selling. That triggers

11:05passive index funds to dump shares automatically. What began as ‘just some selling to fund an IPO’

11:11turns into a full sector meltdown. Trillions in market value disappear. Not because the

11:17businesses got worse, but because forced moves tied to OpenAI’s math ripple through everything.

11:23This is exactly why OpenAI's IPO will break the stock market.

11:27The safety net everyone counted on turns out to be the biggest vulnerability in

11:31the system. When it rips, it goes through the entire index. Every retirement account

11:35that seemed safe gets hit. The market structure itself starts to fail the moment the liquidity

11:41pull exposes just how intertwined everything is. The damage spreads whether anyone wants it or not.

11:47Going public? It’s almost a death sentence. OpenAI has lived its whole life in the shadows

11:52as a private company. That was their golden ticket. They could stack up catastrophic

11:57losses and keep them buried under layers of venture capital fairy dust, press releases,

12:02and nonstop hype about owning the future of everything. Investors swallowed the

12:07story whole because it felt good. The math would work itself out eventually.

12:12Or so everyone told themselves. Losses of $14 to $25 billion for 2026,

12:17spiking to $57 billion in 2027. Cumulative cash burn now revised up to $665 billion by

12:252030. All of it stayed locked away. Only the inner circle saw the full picture.

12:30Everyone else got the polished version. The house-of-cards valuation only stayed upright

12:35because nobody had the real books to look at. The moment they file the paperwork to go public,

12:41that protection vanishes. Strict SEC rules come into play. No more hiding behind NDAs,

12:47selective leaks, or "trust us" slides. Wall Street gets the unfiltered

12:51truth for the first time. And the truth is brutal.

12:54The filings will lay bare the actual ratio. AI infrastructure spending is off the charts. Power

13:00grids are being rebuilt. Custom data centers with liquid cooling and massive power feeds.

13:04Chips upgraded every 18 months because the hardware burns out fast. Meanwhile, end-user

13:09profits are nowhere near close. Losses aren't a phase they're growing out of. They're structural.

13:16Each new user doesn't bring free money; it multiplies the burn. What the market

13:21priced as a lightweight digital app gets exposed as a heavy industrial

13:25utility project with no margin of error. All of a sudden that trillion dollar

13:29dream is put under a microscope. Investors who bought the story

13:33on faith now have to face reality. The IPO will either be way below the hype,

13:37signaling disaster to the whole market… or it gets downsized or pulled entirely, which is even worse.

13:44Wall Street would have to admit the core equation doesn’t work:

13:46revenue growth can't outrun infrastructure costs. The private AI startup market's $1.6 trillion

13:53valuation tower would get the same reality check at once. Funds start to dump anything with AI

13:59exposure. What looked like unstoppable momentum turns into an overvalued bubble overnight.

14:05For years, private venture funding has let OpenAI play fast and loose. ‘Adjusted’ metrics inflated

14:11the story. Monster expenses were buried under the vague label of ‘R&D.’ They sold

14:16the dream of sky-high software-like margins. The federal government doesn’t play that game.

14:22SEC rules demand real accounting, and that means every piece of hardware has to be treated like

14:28the depreciating industrial asset it actually is. This is where the financial reality hits like a

14:33freight train. Those custom GPUs powering frontier models aren’t timeless infrastructure like a cell

14:39tower or undersea cable. A top-tier AI chip stays competitive for maybe 24 to 36 months

14:45before newer architectures make it obsolete. Running tens of thousands - or hundreds of

14:50thousands - of GPUs across sprawling data centers is brutal. Filings will have no choice but to show

14:56billions in hardware write-downs each quarter. Gross margins will be deep in the red. They’re

15:02losing money on the physics of compute… and that’s before salaries, electricity or anything else.

15:08OpenAI will have to disclose the real-world bottlenecks that are throttling expansion.

15:12Building a 1-gigawatt AI cluster isn’t just about buying chips. It’s about securing

15:17enough electricity. Upgrading a regional grid means hundreds of miles of high-voltage lines,

15:23substations, and waiting years for step-down transformers that are already backlogged.

15:28Lead times in many markets are stretching toward 48 months. No amount of cash or hype

15:33can manufacture transformers or rewrite physics. The growth model slams into a

15:38wall. They can’t pull enough power fast enough to keep pace with the cash burn.

15:42Once the audited filings go public, everyone sees the truth. Negative unit economics and

15:48multi-year infrastructure bottlenecks. The algorithms flip instantly. Suddenly,

15:52the AI-adjacent ecosystem - Nvidia, Microsoft, AMD, the hyperscalers - gets re-rated.

15:59That sparks real damage in the financial system. Hedge funds and investors had been borrowing

16:04against these tech giants, piling on more positions. When the filings drop, suddenly

16:09that paper value disappears. Funds scramble to sell anything they can - tech, industrials,

16:15consumer staples - whatever moves fastest. The pain doesn’t stop at equities.

16:19Credit markets feel it next. Corporate bond spreads widen as investors wake up to the fact

16:24that the long-promised AI productivity miracle was built on sand. Companies that loaded up on debt to

16:30chase AI integration now look overextended. If the flagship labs can’t turn a profit,

16:36the downstream adopters who bet on the same tech look even riskier. The private

16:41$1.6 trillion AI valuation tower implodes. None of this happens because of some viral

16:47tweet or bad earnings call. It happens because the SEC forces transparency that

16:52private markets never require. Trillions in paper wealth evaporate not from fear,

16:57but from arithmetic that can no longer be ignored. And the fallout keeps moving. The same physical

17:03constraints are already stressing Nvidia’s supply chain to the breaking point. The production lines

17:07that assemble chips are already stretched. Specialized packaging capacity is limited,

17:12and high-bandwidth memory supply is running short. Any slowdown in these areas can strand billions

17:17in promised capacity, turning the data-center boom into a graveyard of half-built clusters.

17:23The cracks are forming now, deeper than most headlines admit.

17:27To see exactly how those same physical pressures are putting Nvidia’s entire

17:30chip empire on the edge, and why one weak link could cascade into the next leg down,

17:36check out the follow-up: “Why Nvidia’s Supply Chain Is About

17:39to Break the Market Even Harder.” It picks up right where this leaves off.