OpenAI, the company responsible for making artificial intelligence (AI) a household name might be staring at a bleak future. The Sam Altman-led company might go bankrupt, as soon as by the end of 2024 if it continues to burn cash at the current rate, according to a report by Analytics India Magazine.
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The publication noted that it costs nearly $700,000 (Rs 5.8 crore) every day to run just one of its AI services -ChatGPT. Although Altman is attempting to monetise GPT3.5 and GPT-4, the company remains far from breaking even, while profitability remains a utopian concept.
After ChatGPT’s announcement last year, it became one of the fastest-growing AI platforms. However, the initial euphoric increase in numbers has been brought to a halt in recent months, further denting the company’s aspirations of generating respectable revenue.
According to SimilarWeb, compared to 1.7 billion users in June, ChatGPT saw a 12 per cent decline in July, month on month with 1.5 billion users.
No IPO route visible right now
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The report added that it was far too early for any leading AI company such as OpenAI, Anthropic, or Inflection, to head into the initial public offering (IPO) market to increase profitability as well as infuse more cash into the business. An Investopedia report said that it takes at least 10 years of operation and $100 million in revenue for an IPO to be successful.
OpenAI is currently managing to wade through the choppy waters, primarily due to Microsoft’s $10 billion investment. However, with the company projecting annual revenue of $200 million in 2023 and $1 billion in 2024, which seems too good to be true, given plummeting userbase, the losses are expected to mount only. In May, the company’s losses doubled to $540 million, since the development started on the AI chatbot.
The report argues that one of the reasons why ChatGPT is not able to generate revenue is due to API (Application Programming Interface) cannibalisation. While companies are prohibiting workers from using ChatGPT for work, they are using the API to leverage the large language model (LLM) in different workflows. Notably, API is a structured way of letting one programme offer services to other programmes.
The tech war between US-China has also compounded OpenAI’s problems as there is a dearth of enterprise-level GPUs (Graphics Processing Units) in the market. Altman has mentioned repeatedly that the scarcity of GPUs was hindering the company’s ability to train new models.
