OpenAI Is Putting Profits First, Yet It's Bleeding an Astronomical Amount of Money

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ChatGPT creator OpenAI is hemorrhaging massive amounts of cash and failing to make up for it in revenue, The New York Times reports.

Per the report, OpenAI projected in a document passed around to potential investors that it expects to lose a staggering $5 billion this year — a figure that eclipses the company's projected year-end revenue of around $3.7 billion.

OpenAI Is Putting Profits First, Yet It's Bleeding an Astronomical Amount of Money The AI company chalked its sky-high costs up to employee salaries, office rent, and operating costs. Though $5 billion might be an undercount, as OpenAI failed to include noteworthy expenses like equity-based compensation for staffers "among several large expenses not fully explained in the documents," as the NYT put it.

The news comes amid turmoil at OpenAI, which last week saw the shock departure of now-former chief technology officer Mira Murati — the latest in a string of surprising and mysterious exits by high-profile executives — shortly before OpenAI announced that it would be moving away from its famously nonprofit-driven model.

The details of what such a change will entail are unclear. But moving forward, rather than having to defer to its nonprofit board, OpenAI and its CEO Sam Altman will likely have much more control over the direction of the company, its allegedly humanity-benefiting products, and its priorities.

OpenAI Is Putting Profits First, Yet It's Bleeding an Astronomical Amount of Money But despite putting profits first, the company is likely still many years out from making any profit — and investors are starting to ask some big questions about whether that will ever change.

Money Train

The documents reviewed by the NYT were handed to potential investors looking to take part in OpenAI's ongoing funding round. The still-private company is hoping to raise upwards of $7 billion, a number that would bring OpenAI's overall value up to an astonishing $150 billion.

And yet, OpenAI's long-term revenue model remains murky at best.

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In the documents, OpenAI reportedly boasted that, as of June, over 350 million people used its products each month. That's an impressive number, sure, but keeping up with operating costs for those users isn't cheap.

OpenAI Is Putting Profits First, Yet It's Bleeding an Astronomical Amount of Money Only about ten million ChatGPT users cough up 20 bucks for a monthly subscription for access to OpenAI's more advanced models.

Given the incredible amount of energy and capital that it takes to power frontier AI models, it's unlikely that any AI company can subsist entirely on subscription fees.

And in the meantime, OpenAI will need to keep on bleeding billions of dollars as it builds out the infrastructure needed to sustain these models.

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