Developing AI models is too expensive. OpenAI is expected to lose 23.3 billion this year

(New York, 29th) OpenAI is one of the fastest growing companies in history, with a valuation of up to US$80 billion (about RM372 billion), but it is also the company that burns the most money. Foreign media estimates that OpenAI's losses are as high as US$5 billion (about RM23.3 billion), which means that the company may need to raise further funds in the next year.

According to the technology news website The Information, based on undisclosed internal financial data and information provided by relevant people, in terms of cost, OpenAI is expected to spend nearly US$4 billion (about RM18.6 billion) this year to rent servers from Microsoft to operate ChatGPT and the large language model (LLM) behind it.

In addition, OpenAI's model training costs (including the purchase of data licenses) this year may also expand to US$3 billion (about RM14 billion).

People familiar with the matter said that OpenAI accelerated the training of new AI models last year, resulting in the final training cost being much higher than the originally planned approximately US$800 million (about RM3.7 billion).

The Information estimates that this cost will double this year because the company has trained a new version of the large language model and has begun training a new flagship model.

In addition, OpenAI also employs about 1,500 employees, and the cost may be around US$1.5 billion (about RM7 billion), partly due to fierce talent competition with peers such as Google, so the overall operating cost may be as high as US$8.5 billion (about RM39.5 billion).

OpenAI and Microsoft did not respond to media requests for comment on the above reports.

Annual turnover is only 20.9 billion
In terms of revenue, ChatGPT’s annual turnover is expected to reach US$2 billion (approximately RM9.3 billion). But OpenAI also has other revenue, including fees from developers using large language models to develop their own conversational AI applications or coding assistants. This revenue exceeds US$80 million (approximately RM370 million) per month. .

OpenAI’s recent overall monthly revenue is approximately US$283 million (approximately RM1.3 billion), which means that its full-year revenue may range from US$3.5 billion to US$4.5 billion (approximately RM16.3 billion to RM20.9 billion).

After deducting operating costs, there will be a loss of US$4 billion to US$5 billion (approximately RM18.6 billion to RM23.3 billion).

Foreign media pointed out that this explains why OpenAI CEO Altman described the company as "the most capital-intensive startup in the history of Silicon Valley" and also means that OpenAI will need to raise funds as soon as possible.

To date, OpenAI has raised US$13.5 billion (approximately RM62.8 billion) in 11 rounds of financing. The latest rounds of financing were in April and February this year, but the earlier financing round dates back to January last year.