HOW IPOS COULD CHANGE THE AI GAME
AI is booming, and that has put IPOs from sector heavyweights on the horizon. On the one hand, that’s an exciting prospect. But, it could also lead to some big changes, according to Adrian Cox, research analyst at Deutsche Bank Research Institute.
In a note, he pointed out four ways in which “upcoming IPOs will change the AI boom forever.”
The first point Cox raises is “greater transparency for financials and business models” – for example, companies will need to prepare documents on reporting, risk analysis and forecasts. More disclosures also mean that light may be shed on the business models of the model makers, he said.
Secondly, there should be “more diverse funding sources – and more spending,” Cox said. Public market funding would mean moving away from large, but individual investments and financing arrangements for example. IPOs would also provide companies with leverage capacity – which in turn could boost expenditures, the report said.
Then, there would be “greater accountability for their actions – and for the industry.” Cox noted that public companies are generally “held to higher standards around consistency and accountability,” but also pointed to cybersecurity concerns and backlash over data centres.
That brings us to Cox’s last point – a “new era for comparing valuations to peers – and the past.” Worries about an AI bubble, and fears of a repeat of the dot-com bust, have caused frequent market jitters. Part of the AI bubble fears “is the lack of pure-play, public, investable companies to act as a benchmark. A listed OpenAI or Anthropic would fill a huge gap,” Cox said.