OpenAI to lose $5bn this year?

Recently, foreign media calculated an account for OpenAI, which may have a blood loss of $5 billion this year. OpenAI is one of the fastest growing companies in history, but it's also one of the most expensive. As one of the fastest rising startups in history, OpenAI's extraordinary achievement also lurks behind the challenge of soaring operating costs. This is based on a combined estimate of OpenAI's spending on running ChatGPT and training the next generation LLM, as well as hiring and staff costs. If correct, the cash-burning machine, valued at $80bn, will need to raise more capital in the next 12 months or so. This is undoubtedly a serious test for the star company, which is currently valued at $80 billion. OpenAI and Microsoft did not respond to requests for comment.

First, developing and running AI models is expensive, and AI companies have not yet been able to reduce that cost. OpenAI has invested heavily in training large language models such as ChatGPT and new models. According to analysts, the cost of training ChatGPT and the new model could be as high as $3 billion this year, including paying for data usage. Training large-scale AI models requires thousands of Gpus or TPU clusters, and a single training session can cost millions of dollars in electricity and equipment depreciation. The number of OpenAI employees has grown rapidly over the past few years, reaching about 1,500 to date, and there are still job openings on the website. This has led to a significant increase in human costs, which by some estimates could reach $1.5 billion.

Second, OpenAI's revenue growth rate is difficult to match the cost growth rate, OpenAI's revenue sources are mainly ChatGPT subscription fees, API interface service fees and enterprise user revenue, but its revenue growth rate may not match the cost growth rate. According to some analyses, OpenAI's recent total monthly revenue was $283 million, which could mean full-year sales of between $3.5 billion and $4.5 billion. However, this level of revenue is still well below its operating costs. At present, the competition in the field of artificial intelligence is becoming increasingly fierce, and OpenAI needs to continuously invest in technological innovation and product research and development to maintain its competitive advantage. However, this investment has further exacerbated its financial pressure.

In addition, the current capital market's tolerance for high-growth and high-risk companies is decreasing, which may adversely affect OpenAI's financing ability and market valuation. While some venture capital firms remain bullish on OpenAI's long-term strategic and technological prospects, concerns about its current financial health could make it more difficult to raise funds. OpenAI has invested heavily in technology research and development, which is an important guarantee for its technological leadership. However, this investment also increases its operating costs and may make it difficult to be profitable in the short term.

In summary, OpenAI will lose $5 billion this year mainly because of high operating costs and revenue growth is difficult to match. Faced with a large funding gap, OpenAI may need to seek more partnerships, adapt to diverse use cases, and attract more deep-pocketed new investors. OpenAI will continue to make technological innovations in the field of artificial intelligence to drive technological advances and seek new sources of revenue. However, along with technological innovation, there is also a need to focus on cost control and financial health.