OpenAI, an artificial intelligence star company, is undoubtedly one of the fastest-growing companies in history, but the company has gradually exposed a major problem it faces - revenue cannot cover high development and operating costs.
According to undisclosed internal financial data and information provided by relevant business personnel, analysis suggests that the ChatGPT manufacturer may lose $5 billion this year. If this analysis is correct, OpenAI will need more financing in the next 12 months.
Annual loss of 4-5 billion US dollars
Developing and running artificial intelligence models requires high costs, and AI companies are currently unable to achieve cost reduction.
For example, OpenAI, according to internal sources cited by the media, is expected to spend nearly $4 billion as of March this year on renting Microsoft servers to support ChatGPT, a large underlying language model.
In addition to this expenditure, training costs including data expenses may also climb to $3 billion this year. Last year, the company increased the training speed of its new model, resulting in higher than expected final costs. However, this year, as OpenAI's flagship version of the big model begins training, the related expenses will double compared to last year.
In addition, employee salaries are also a high expense. OpenAI has a total of around 1500 employees, and in order to compete with Silicon Valley giants for excellent talent, the total cost is $1.5 billion. Moreover, the company's official website lists approximately 200 vacant positions, which may indicate that more recruitment will take place in the second half of the year.
Overall, OpenAI's operating costs this year may reach as high as $8.5 billion.
As for revenue, in addition to the approximately $2 billion in annual revenue from ChatGPT subscription services, OpenAI can also charge developers. Data shows that as of March this year, the revenue from this business in US dollars will exceed $80 million.
Combined with other company revenues, it is estimated that OpenAI's annual revenue this year will reach between $3.5 billion and $4.5 billion.
By calculation, it can be concluded that OpenAI may lose $4-5 billion this year.
The AI industry is facing heavy pressure
It can be seen that the development and operation costs of large models account for the majority of expenses for artificial intelligence companies. If these costs cannot be reduced, will these companies charge higher prices for artificial intelligence tools?
Ion Stoica, co-founder of enterprise software company VNet, pointed out that the industry is confident that inference costs will continue to significantly decrease, which means OpenAI may gain more reasonable profits from its models in the coming years. However, training costs may be more complex, and the company may invest as much money as possible to train larger models.
It is worth mentioning that on Wednesday (July 24th), technology stocks in the US stock market fell across the board, and the Nasdaq Composite Index, which is concentrated in technology stocks, plummeted by 3.6%, setting the largest daily decline since October 2022; The S&P 500 index plummeted by 2.3%; The Dow Jones Industrial Average also fell 1.2% on that day.
On Wednesday, the "Big Seven" of the US stock market also experienced its largest single day decline since October 2022, with each stock experiencing a rare drop. This is partly due to the unsatisfactory financial reports of Tesla and Alphabet in the second quarter.
The sharp fluctuations in technology stocks seem to indicate that more investors are slowly believing in the view of Wall Street that the foam triggered by AI in the past year will inevitably burst.