OpenAI's internal financial projections reveal an aggressive growth strategy coupled with massive losses and heavy reliance on partners like Microsoft, according to documents reviewed by The Information.
The AI company aims to boost revenue to $100 billion by 2029, a 100-fold increase from 2023. However, OpenAI doesn't expect to turn a profit until 2029. Losses could triple to $14 billion by 2026, not counting stock-based compensation, The Information reports, citing an "analysis of data contained in OpenAI financial documents."
Cash burn set to soar
OpenAI burned through $340 million in the first half of 2024, leaving it with $1 billion in cash before its latest funding round. The company expects to lose $44 billion between 2023 and 2028.
AI model training and operation will consume 60-80% of spending. OpenAI anticipates $10 billion in training costs alone for 2026, plus $5 billion for research. Anthropic CEO Dario Amodei similarly predicted up to $10 billion in AI training costs for 2026.
OpenAI's 41% gross margin falls well below the 65%+ industry average for cloud software startups. The company aims to boost this to 67% by 2028.
ChatGPT remains key revenue driver
OpenAI expects ChatGPT to stay its main moneymaker, far outpacing API sales to developers. ChatGPT prices could double by 2029. New offerings like video generation and robotics software may surpass API sales by late 2025, reaching nearly $2 billion in revenue.
The projections suggest that OpenAI will continue to try to cover as many AI applications as possible in-house, making ChatGPT the center of much of white-collar work. CEO Sam Altman has warned that AI startups without a clear differentiation from OpenAI's products could be "steamrolled" by the company's model progress.
Rising personnel costs, falling data expenses
Personnel costs are expected to jump from $700 million in 2024 to $2 billion in 2025. Interestingly, OpenAI expects data costs to decline, suggesting less reliance on external data sources.
The company has signed numerous media licensing deals, mostly to integrate current content into its planned SearchGPT product, which will become part of ChatGPT when it's ready.
Computing costs remain unclear. Microsoft appears to be offsetting some cloud costs against investments through credits. OpenAI is also planning investments in data centers and custom AI chips, which may add costs not yet fully reflected in these projections.
