According to The Information, OpenAI’s internal forecasts indicate significant financial losses in the medium term.
The company expects to become profitable in 2029, at which point its investors will purportedly see returns on their investment.
OpenAI reportedly expects it’ll take the company five years to generate revenue, as reported by The Information. The outlet claims that it obtained access to an internal projection from the AI startup that also appears to disclose other significant and concerning details, particularly for investors.
OpenAI will be profitable by 2029. An internal study by OpenAI purportedly projects that the company will become profitable by 2029, with expected revenue of at least $100 billion. This would represent a significant increase from the projected revenue of $3.7 billion in 2024.
Subscription prices on the rise. To achieve these future revenue targets, OpenAI is reportedly considering increasing the prices of its premium plans. As such, the current $20 subscription for ChatGPT Plus is expected to cost $44 within the next five years.
Significant losses in 2024. The projected 2024 revenues are much lower than the expected losses. Specifically, OpenAI is expected to incur a staggering $5 billion loss in 2024, a figure that’s expected to increase in the following years.
Losses of $14 billion by 2026. According to the internal projections mentioned in The Information report, losses will continue to escalate and are expected to reach $14 billion by 2026, nearly triple the losses expected for 2024. This substantial figure is likely to test investors’ patience.
Losses of $44 billion by 2028. Furthermore, according to The Information editor Stephanie Palazzolo, OpenAI estimates total losses between 2023 and 2028 will amount to $44 billion. This would be close to the amount Meta has lost with its investment in the metaverse since 2020 ($4.5 billion).
A risky move for investors. Investors have shown surprising confidence in OpenAI’s future, as evidenced by its recent $6.6 billion funding round. The demand was so high that there were more interested investors than available slots. Instead of acquiring a direct stake in OpenAI, these investors will receive a share of the company’s future profits.
Microsoft will get a big payout (if everything goes well). If OpenAI becomes profitable, Microsoft will receive 20% of the revenue. This percentage may seem high, but it reflects Microsoft’s substantial investment in the AI startup, which totals over $13 billion, primarily in the form of credits for using its Azure infrastructure for AI models.
An uncertain future. The projections leaked by The Information are just that: projections. It remains unclear whether AI can gain widespread acceptance and generate revenue, as expected by OpenAI, its investors, and other companies in the industry. As such, there’s absolute uncertainty surrounding the future of this segment.
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