World's leading AI company faces $5 billion loss this year
OpenAI, the creator of ChatGPT, is projected to suffer a loss of up to $5 billion this year and could potentially exhaust its cash reserves within the next 12 months, as per an analysis by The Information. The report draws on previously undisclosed financial data and sources familiar with the company's operations. It is anticipated that OpenAI will spend approximately $7 billion solely on artificial intelligence training this year, in addition to around $1.5 billion on staffing costs.
OpenAI's expenditure outpaces rivals, new funding round likely
OpenAI's expenses significantly surpass those of its competitors, such as the Amazon-backed Anthropic, which projects a 2024 burn rate of $2.7 billion. The Information's report suggests that these high costs may compel OpenAI to pursue another round of financing within the next year to bolster its balance sheet. To date, OpenAI has completed seven funding rounds and amassed over $11 billion, according to data from Tracxn. It was most recently valued at $80 billion, per The Information.
OpenAI's recent developments and future projects
OpenAI launched ChatGPT in November 2022, which quickly gained traction with over 100 million weekly users. On July 18, the US-based AI firm announced the introduction of a new generative AI model named "GPT-4o mini." This model is 60% cheaper than its least expensive existing model and offers superior performance. Furthermore, OpenAI is reportedly working on an advanced reasoning AI model called "Strawberry," expected to outperform the current flagship GPT-4o and exhibit more human-like responses.
OpenAI faces regulatory challenges and scrutiny
OpenAI is confronting regulatory hurdles, including a potential investigation by the US SEC tied to allegations of misconduct related to non-disclosure agreements. On July 23, US lawmakers sent a letter to OpenAI CEO Sam Altman expressing concerns about the company's safety standards and employment practices. The letter questioned the AI firm's perceived lack of transparency and asked if OpenAI would "commit to making its next foundation model available to US Government agencies for pre-deployment testing, review, analysis, and assessment."
