What you need to know
- OpenAI recently closed its round of funding having raised $6.6 billion from investors, including Microsoft and NVIDIA, pushing its market valuation to $157 billion.
- The ChatGPT maker burns through money fast on training its AI models and is expected to make $5 billion in losses within the next few months.
- The AI firm projects to make $11.6 billion in sales next year, a significant feat from its current $3.7 billion in revenue which could indicate subscription price revisions for its next-gen AI models.
Earlier this year, OpenAI was reportedly on the brink of bankruptcy with projections of making a $5 billion loss within the next 12 months. Experts and OpenAI insiders disclosed that the issue could be attributed to the ChatGPT maker burning through money fast, including $7 billion in training its AI models and an additional $1.5 billion in staffing. However, OpenAI’s $3.7 billion revenue doesn’t meet the highlighted operational costs.
Market analysts predicted that the AI firm was in dire need of cash flow, and another round of funding from investors was its only option. Microsoft, NVIDIA, and Apple were rumored to be among the investors to participate in OpenAI’s latest funding round, pushing its market cap well beyond $150 billion. However, Apple dropped out of the exercise at the eleventh hour for unclear reasons as OpenAI was about to close the funding round.
And now, OpenAI has officially closed its funding round with a $157 billion market capitalization after raising $6.6 billion from many big tech corporations, including Microsoft, NVIDIA, SoftBank, and more (via CNBC).
According to OpenAI:
“The new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems.”
As you may know, OpenAI generated $300 million in revenue in September 2024, translating to a whopping 1,700% increase since the beginning of 2023. The ChatGPT maker projects making $11.6 billion in sales next year, an ambitious feat from its current $3.7 billion in revenue. This is amid claims that OpenAI might hike the price of its products and services, including increasing the subscription price to $2,000 per month for access to its next-gen AI models.
Bankruptcy is just the tip of the iceberg for OpenAI
While bankruptcy could potentially cripple OpenAI’s operations, we recently learned that top execs at the firm expressed their fear of the company collapsing. Its Chief Scientist Ilya Sutskever departed from the company to focus on a “personally meaningful” project amid company restructures, offering some revelations along the way.
The company reportedly struggled to identify a suitable position for Sutskever amid the restructures, making it harder for him to return to work. The Chief Scientist has since launched a safe superintelligence-focused AI firm dubbed Superintelligence Inc., which recently raised $1 billion in funding from investors to support the cause.
OpenAI has lost multiple of its high-profile execs and staffers following the OpenAI fiasco that led to CEO Sam Altman’s bizarre firing and rehiring by the board of directors, including Chief Technology Officer Mira Murati, Chief Research Officer Bob McGrew, and Vice President of Research Barret Zoph.
RELATED: Everything new Microsoft announced for Copilot+ AI
Elsewhere, the ChatGPT maker is facing copyright-infringement lawsuits though Altman argues copyright law doesn’t prohibit using copyrighted content to train AI models. However, the CEO admitted developing tools like ChatGPT without copyrighted content is impossible.
