OpenAI could lose as much as $5 billion this year due to the enormous costs of running AI products like ChatGPT, and will likely need to raise more funding within the next 12 months, according to a startling report published on Thursday.
CEO Sam Altman’s company, which had a market capitalization of $80 billion as of February, is expected to spend $7 billion this year training and operating its popular chatbots. Information was carried out.
According to the report, this huge sum includes approximately $4 billion spent on renting server space from Microsoft needed to maintain ChatGPT and the large-scale language models that power the chatbot.
An additional $3 billion will be needed to cover the costs of training AI models on new data.
That includes Open AI’s spending on deals with publishers to license their copyrighted content, such as its deal with News Corp, the parent company of The Washington Post.
Additionally, OpenAI is estimated to spend $1.5 billion annually on labor costs for its roughly 1,500 employees, according to The Information.
The company, which has received a $13 billion investment from Microsoft, has been investing heavily in recruiting top talent to compete with Google and other AI rivals.
OpenAI did not immediately respond to The Washington Post’s request for comment on the report.
The estimate was based on previously unpublished data and interviews with “people involved in the business,” the media reported.
The estimated labor spending figures were described as “estimates” based on past projections and previous reports of OpenAI’s hiring activities.
If this analysis is accurate, it could call into question whether OpenAI will be able to achieve profitability in the near future as it struggles to maintain its advantage over generative AI rivals such as Google and Meta.
“Investors should ask themselves: What is their strength? What is their unique technology?” Gary Marcus, an artificial intelligence expert and professor at New York University, wrote on X.
“Meta is offering similar technology for free, so where is their revenue stream? Do they have a killer app? Will the technology be credible? What is real and what is just a demo?” Marcus added.
Earlier this week, billionaire Mark Zuckerberg’s Meta released its proprietary AI model, called Llama 3.1, as an open-source framework, meaning developers can access the code for free.
OpenAI secured an early lead in the AI race thanks to the popularity of ChatGPT, which wowed users with its realistic responses to a huge number of user prompts.
Last November, Altman announced that chatbots had reached 100 million weekly users.
The company released its latest AI model, called GPT-4o, in May.
This model Have realistic voice conversations with users The feature drew immediate comparisons to the 2013 film “Her,” which starred actress Scarlett Johansson as an AI program.
Following the release of the feature, OpenAI came under fire after Johansson slammed the company for using a voice that sounded similar to Altman’s for the feature, despite Altman’s refusal to use his voice.
Following her public criticism, Open AI announced it was suspending use of the voice, named “Sky.”
Altman’s company faces a new and ongoing headache in the form of former employees who accuse it of ignoring safety concerns and pushing ahead with accelerated AI development.
