According to analysis by The Information , which received access to previously undisclosed internal financial data and insider information, OpenAI is burning through billions of dollars to keep itself alive.
Net losses for 2024 alone are expected to hit US$5 billion, which isn’t reassuring for a business which has thus far raised “only” US$11 billion from Microsoft and a handful of other investors (and most of it not even in cash).
The company spends US$7 billion on training its GPT models, with additional US$1.5 billion in staffing expenses.
It makes back anywhere between US$3.5 to US$4.5 billion in ChatGPT subscriptions and access fees, barely covering its operating costs, as running ChatGPT costs at least US$700,000 per day — or more, given that the above figure was quoted last year . Asset rich, cash poor
You may remember Microsoft’s bold investment of US$10 billion announced in January of last year, which followed a billion it injected into OpenAI in 2019.
What was less publicised is the fact that only a small portion of the sum was transferred in cash, with the bulk coming in the form of Azure cloud compute credits which tied the company even closer to Microsoft.
It’s no wonder then that Satya Nadella, Microsoft’s CEO, privately boasted that it wouldn’t matter if OpenAI “disappeared tomorrow” because his company has all the “rights and capability” and implied total control over the popular startup: “we are below them, above them, around them” (revealed in court documents from the lawsuit filed by Musk against OpenAI): Musk v Altman OpenAI complaint Nevertheless, while OpenAI may be running low on money, its intellectual property, human capital and currently most-trusted and, in many ways most impressive AI services are undoubtedly worth billions.
It just needs an occasional injection to stay alive. OpenAI is here to stay, the question is: in what form?
Of course, nobody, least of all Microsoft, will let OpenAI simply go bust and die. The company’s achievements make it very valuable to all potential bidders.Even if, on paper, it has a very short financial runway — likely less than 12 months — it’s not going to […]
Is AI bubble about to pop? Internal documents reveal OpenAI may go bankrupt within 12 months
