ChatGPT creator OpenAI may run out of cash soon
OpenAI, the large language model startup at the forefront of the booming industry, could lose up to $5 billion this year, which would put it on the brink of bankruptcy without additional cash injections, the Information analysis reveals.
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OpenAI, the large language model startup at the forefront of the booming industry, could lose up to $5 billion this year, which would put it on the brink of bankruptcy without additional cash injections, the Information analysis reveals.
After the latest investment round, led by venture firm Thrive Capital, Microsoft-backed OpenAI reached a valuation of $80 billion. Some have predicted that the company’s net worth could reach as high as one trillion dollars soon.
However, bright prospects do not seem to correlate with cash flow.
OpenAI may burn $5 billion in 2024 and run out of cash in 12 months unless the startup raises more money.
OpenAI plans to spend $7 billion this year on AI training and inference and $1.5 billion on staffing while generating approximately $3.5 billion in revenue.
A previous report from SemiAnalysis revealed that ChatGPT, which took the internet by storm, costs almost $700,000 a day to operate, as compute hardware costs 0.36 cents per query. One of the fastest-growing businesses in history is also one of the costliest to run, the Information estimates.
While further cash injections are likely, some shared doubts.
“Investors should ask: What is their moat? Unique tech? What is their route in profitability when Meta is giving away similar tech for free? Do they have a killer app? Will the tech ever be reliable? What is real, and what is just a demo?” Gary Marcus, founder and CEO of Geometric Intelligence, posted on X.
SCOOP: OpenAI may lose $5B this year & may run out of cash in 12 months, unless they raise more $, per analysis @theinformation.
undefined Gary Marcus (@GaryMarcus) July 24, 2024
Investors should ask: What is their moat? Unique tech? What is their route in profitability when Meta is giving away similar tech for free? Do they… pic.twitter.com/i5EkvEFEQd
According to Appfigures, the introduction of GPT-4o led to the biggest spike in OpenAI’s ChatGPT revenues and mobile downloads. The estimated daily average of net revenues reached nearly $900,000 in May.