OpenAI Faces $5 Billion Loss: Is Sam Altman’s Startup in Trouble?
OpenAI, the ambitious AI startup, is reporting massive losses. By the end of 2024, after covering operating costs, the company is expected to face an astonishing $5 billion deficit.
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OpenAI, the ambitious AI startup, is reporting massive losses. By the end of 2024, after covering operating costs, the company is expected to face an astonishing $5 billion deficit.
Sam Altman, CEO of OpenAI and a strong advocate for universal basic income, is now focused on tightening the company’s budget—but this is no easy task.
A major portion of OpenAI’s expenses is tied to cloud services from Microsoft, which are essential for keeping the company’s products running. Microsoft, co-founded by billionaire and philanthropist Bill Gates, has already invested more than $13 billion in OpenAI.
In addition to cloud costs, OpenAI spends a significant amount on salaries and office space.
These rising expenses track with the increasing number of ChatGPT users, which has now reached 10 million.
Currently, users pay $20 per month to use the chatbot, but by the end of the year, Altman plans to raise the price to $22. Over the next five years, the cost of using ChatGPT could double.
So how did news of OpenAI’s losses and the price hike reach the public?
This information was shared directly by OpenAI with potential investors. The company is in the final stage of a funding round, aiming to raise an additional $7 billion.
Earlier talks involved Apple, Nvidia, and Microsoft, but Apple unexpectedly pulled out of negotiations last week.
Still, the mood among potential investors remains optimistic. Microsoft is expected to invest another $1 billion, while Tiger Global in New York and the UAE-backed MGX fund have also expressed interest in supporting OpenAI.
Altman’s team is hopeful that this funding round will boost the company’s valuation to $150 billion, positioning OpenAI as the most valuable tech startup in the world.
This milestone would reinforce the idea that Sam Altman’s company is still on solid ground. However, it’s worth noting that several top executives, including CTO Mira Murati, and key researchers have left OpenAI in recent months.
The optimistic outlook for this funding round is likely supported by OpenAI’s impressive revenue growth, which reached $300 million in August—a 1700% (!) increase since early 2023.
Analysts predict OpenAI’s revenue will continue to surge, potentially reaching $100 billion within the next five years.
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