OpenAI's losses doubled to $540 million due to ChatGPT and hiring efforts
OpenAI plans to recoup a $12 billion investment from Microsoft with commercial AI models
6 May 2023
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Kunal Tyagi
OpenAI LP's losses doubled to $540 million in 2022.
The costs associated with developing ChatGPT and meeting growing demand may add further cost pressure.
OpenAI plans to recoup the investment by selling commercial versions of its AI models, with revenue projected to hit $200 million this year before climbing to $1 billion in 2024.
According to a new report, OpenAI LP is considering raising additional funding after its losses doubled to $540 million in 2022. One reason for the loss is the startup's efforts to hire artificial intelligence engineers from Google and Meta Platforms. Additionally, the steep cost of training AI models and the popularity of ChatGPT, which requires significant infrastructure, may have contributed to the losses. Research firm SemiAnalysis estimates that ChatGPT could cost OpenAI up to $700,000 per day. OpenAI CEO Sam Altman has suggested the startup may seek to raise $100 billion in funding to develop an AI system that can improve its own capabilities.
OpenAI has already raised billions of dollars since its launch in 2015 as a nonprofit. It later restructured as a for-profit company and secured a $1 billion investment from Microsoft Corp in 2019. Recently, the startup has raised an additional $12 billion from Microsoft in two tranches. OpenAI plans to recoup the investment by selling commercial versions of its AI models. The startup already offers ChatGPT Plus, a paid version of ChatGPT, and plans to introduce a second commercial chatbot service for businesses.
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Despite the multi-billion dollar investment from Microsoft, the costs associated with developing ChatGPT and meeting growing demand may add further cost pressure. OpenAI CEO Sam Altman has alluded to rising costs, stating that the startup may be "the most capital-intensive startup in Silicon Valley history." Altman has suggested that OpenAI could seek to raise around $100 billion in the coming years as it works towards developing artificial general intelligence (AGI).
Generative AI tools like ChatGPT have grown in popularity as users discover their productivity benefits, and investors are drawn to the prospect of the technology upending multiple industries. OpenAI's revenue is projected to rise significantly this year, with expectations that revenue will hit $200 million this year before climbing to $1 billion in 2024. Despite its losses, OpenAI remains a significant player in the AI industry, with the potential to revolutionize how businesses operate and how people live their lives.
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