Artificial intelligence company OpenAI, the creator of the popular chatbot ChatGPT, is set to face substantial financial losses this year, despite its significant revenue growth. According to media reports, the company expects to generate $3.7 billion in revenue by the end of the year but also anticipates losses amounting to approximately $5 billion. The losses are attributed to high operational costs, including salaries, office rent, and the substantial expense of computing power required to run its AI models.
Despite these losses, OpenAI is experiencing rapid revenue growth, driven primarily by its ChatGPT service, which has surged in popularity since its launch in 2022. In August alone, OpenAI reported $300 million in revenue, a staggering increase compared to earlier in the year. The company’s revenue is projected to triple by 2025, potentially reaching $11.6 billion, and is expected to hit $100 billion by the end of the decade.
To offset some of its costs, OpenAI is planning to raise subscription fees for ChatGPT users. Currently priced at $20 per month, the fee is expected to increase to $22 by the end of the year and could rise further to $44 within five years. This price adjustment is part of a broader strategy to increase revenue as the company continues to expand its suite of AI products.
OpenAI’s financial trajectory is bolstered by its partnership with Microsoft, which provides the computing power through its cloud services, a critical component for operating the large-scale AI models. However, this partnership also represents one of the company’s most significant costs.
The company is also in the midst of a major restructuring effort, which includes transitioning its for-profit arm into a public benefit corporation, making it independent from the nonprofit board that currently governs it. This shift is intended to make OpenAI more attractive to investors and to provide more liquidity options for its employees.
The restructuring comes amid reports of key executive departures, including the resignation of the company’s Chief Technology Officer, signaling potential shifts in leadership as the company navigates its transformation. Despite these changes, OpenAI is expected to close a major funding round soon, with a valuation of over $150 billion, driven by investments from major venture capital firms and tech giants.