SoftwareAIReport claims that OpenAI has burned through $8.5 billion on AI training and staffing, and could be on track to make a $5 billion lossWhen you purchase through links on our site, we may earn an affiliate commission.Here’s how it works.
SoftwareAIReport claims that OpenAI has burned through $8.5 billion on AI training and staffing, and could be on track to make a $5 billion lossWhen you purchase through links on our site, we may earn an affiliate commission.Here’s how it works.
When you purchase through links on our site, we may earn an affiliate commission.Here’s how it works.
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The average PC user will probably think ‘ChatGPT’ whenever generative AI is mentioned, as it’s arguably the world’s most well-known and widely used LLM system. An investigative report into the financial status of its creator, OpenAI, suggests that despite its popularity, the immense costs of training the AI models and running the servers that host them are so high that the company is on track to make an operational loss of $5 billion.
That’s according toThe Information(viaWindow’s Central), which based its projection on numbers garnered from unreleased internal financial statements and various industry figures. Founded in 2015, OpenAI has grown in size and scope due to multiple investments, with Microsoft pouring billions of dollars into the AI firm over the years.
The most recent injection of cash,$10 billion in early 2023, was rumoured to include a 75% slice of OpenAI’s profits and a 49% stake in the company, as well as integrating ChatGPT into Bing and other Microsoft systems. In return, as well as the investment, OpenAI is thought to get access to Azure cloud servers and a substantially reduced rate.
It’s claimed that OpenAI has spent roughly $7 billion on LLM (large language models) training and inference, and as much as $1.5 billion on staffing. Other analysts have estimated thatit costs in the order of $700,000per dayto run ChatGPT, due to the expense of Nvidia’s AI servers, though determining the exact cost isn’t realistically feasible. Even if one combines all of this, OpenAI should still be making a profit, so why is it losing so much money?
The problem appears to be a multi-faceted one. OpenAI is heavily invested in being the first company to make AGI (artificial general intelligence) a reality and that will certainly be eating into some of the profits. It’s also not the only company developing generative AI systems and faces competition from Anthropic, Amazon, Google, Nvidia, Meta, xAI, and numerous others—while ChatGPT is the most well-known, it’s getting an increasingly smaller slice of the total pot of revenues that’s up for grabs.
While The Information claims that OpenAI could possibly go bankrupt, this isn’t the first time that such a thing has been said. Dire warnings of the AI company’s future weresuggested last year, though other analysts pointed out that therelative cost of AI training, inference, and chip manufacturingwill decrease in time, as more companies get involved in the market.
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Given the size of Microsoft’s total investment so far, I don’t think OpenAI is going to bring in the administrators just yet. Early this year, it wasestimated to be worth $80 billionand while that’s hardly chump change, Microsoft could afford to buy it outright if it looked like things really were heading for the drains.
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