Report: OpenAI may lose $5 billion this year and run out of cash within 12 months

Author: Alex O’Donnell, CoinTelegraph; Compiler: Tao Zhu, Golden Finance

According to an analysis by The Information, OpenAI is running a costly business that could lose up to $5 billion by 2024, putting the ChatGPT maker at risk of running out of cash within 12 months.

The report, citing previously undisclosed financial data and people familiar with the business, said OpenAI will spend about $7 billion on AI training alone and another $1.5 billion on staffing.That far exceeds spending by competitors such as Amazon-backed Anthropic, which expects a $2.7 billion burn rate in 2024.

OpenAI's high spending may force the company to complete another round of financing within 12 months to strengthen its balance sheet, the report said. According to Tracxn data, OpenAI has completed seven rounds of financing, raising more than $11 billion - the most recent of which was a private financing with ARK Investment Management in April for an undisclosed amount.

OpenAI launched ChatGPT in November 2022. The AI ​​assistant quickly gained traction, with more than 100 million weekly users. The US-based AI company announced the launch of a new generative AI model called "GPT-4o Mini" on July 18.

Source: Sam Altman

OpenAI is also reportedly building an AI model with advanced reasoning capabilities that will surpass its current flagship GPT-4o. The new model, named "Strawberry," will also reportedly respond more like a human.

The tech company faces regulatory challenges, including a potential SEC investigation into allegations of misconduct related to nondisclosure agreements. On July 23, U.S. lawmakers sent a letter to OpenAI CEO Sam Altman expressing concerns about OpenAI’s safety standards and hiring practices.

The letter, first obtained by The Washington Post, questioned the company’s lack of transparency and asked whether OpenAI would “commit to making its next foundational model available to U.S. government agencies for pre-deployment testing, review, analysis, and evaluation.”