OpenAI, Home Of ChatGPT, May Lose $5B This Year
Someone needs to ask ChatGPT for a cheaper solution to artificial intelligence. An analysis conducted by The Information claims OpenAI could lose as much as $5 billion this year due to the massive costs of running AI products like ChatGPT.
The company, whose market value is estimated at $80 billion as of February, is likely to spend as much as $7 billion this year to train and operate its chatbot. That means more money needs to be raised, even as a path to profitability gets murkier, thanks to increasing competition.
Cost Breakdown
The OpenAI costs include renting server capacity from Microsoft that’s required to maintain ChatGPT, the report said. That accounts for about $4 billion. As much as $3 billion more covers the cost of training the AI models with new data, including deals with publishers for use of their copyrighted content.
OpenAI is estimated to spend another $1.5 billion per year on labor costs for its 1,500 employees, according to The Information. The estimates were based on previously undisclosed data and interviews with “people involved in the business,” the outlet said.
Challenges and Questions
“Investors should ask: What is their moat? Unique tech?” Gary Marcus, an artificial intelligence expert and NYU professor, wrote on X. “What is their route in profitability when Meta is giving away similar tech for free? Do they have a killer app? Will the tech ever be reliable? What is real and what is just a demo?” Marcus added.
