OpenAI's Frenzied Spending Paves Way for Billion-Dollar Losses
In a stunning display of fiscal irresponsibility, technology giant OpenAI has committed a staggering $1.4 trillion to building out its data center infrastructure over the next eight years. However, this aggressive spending strategy is projected to hemorrhage $74 billion in losses by 2028 alone, according to internal documents obtained by the Wall Street Journal.
In stark contrast, AI startup Anthropic, which boasts a significantly lower valuation of nearly $200 billion, has managed to quietly build a subscriber base of over 300,000 corporate customers. This customer base generates approximately 80% of its revenue, marking a far more sustainable business model than OpenAI's approach.
While OpenAI claims to have one million enterprise subscribers and seven million total ChatGPT for Work "seats," its margins on these subscriptions are significantly smaller than those of Anthropic. Instead of adopting a frugal approach to building out its data centers or focusing on monetizing its vast subscriber base, OpenAI is opting for an expansive strategy that involves burning through cash at an alarming rate.
The company's efforts have led to a series of eye-opening financial disclosures, including the fact that its video generation model, Sora 2, costs $15 million per day – amounting to a staggering annualized expense of $5 billion. This approach bears striking resemblance to the ZIRP-era of Big Tech, where companies were willing to incur massive losses in exchange for access to vast audiences.
Internal documents indicate that OpenAI's financial model is predicated on rapidly growing revenue and eventual profitability by 2030. However, if this comes to fruition, it will only serve as a reminder of the massive amount of money the company has burned over the past eight years – roughly 14 times more than its rival, Anthropic.
The consequences of OpenAI's actions are far-reaching, with potential repercussions that could extend beyond the AI sector itself. As the company continues to lobby for government guarantees on its spending, it raises questions about the long-term sustainability of such a model and the risks faced by other companies operating in the same space.
In a stunning display of fiscal irresponsibility, technology giant OpenAI has committed a staggering $1.4 trillion to building out its data center infrastructure over the next eight years. However, this aggressive spending strategy is projected to hemorrhage $74 billion in losses by 2028 alone, according to internal documents obtained by the Wall Street Journal.
In stark contrast, AI startup Anthropic, which boasts a significantly lower valuation of nearly $200 billion, has managed to quietly build a subscriber base of over 300,000 corporate customers. This customer base generates approximately 80% of its revenue, marking a far more sustainable business model than OpenAI's approach.
While OpenAI claims to have one million enterprise subscribers and seven million total ChatGPT for Work "seats," its margins on these subscriptions are significantly smaller than those of Anthropic. Instead of adopting a frugal approach to building out its data centers or focusing on monetizing its vast subscriber base, OpenAI is opting for an expansive strategy that involves burning through cash at an alarming rate.
The company's efforts have led to a series of eye-opening financial disclosures, including the fact that its video generation model, Sora 2, costs $15 million per day – amounting to a staggering annualized expense of $5 billion. This approach bears striking resemblance to the ZIRP-era of Big Tech, where companies were willing to incur massive losses in exchange for access to vast audiences.
Internal documents indicate that OpenAI's financial model is predicated on rapidly growing revenue and eventual profitability by 2030. However, if this comes to fruition, it will only serve as a reminder of the massive amount of money the company has burned over the past eight years – roughly 14 times more than its rival, Anthropic.
The consequences of OpenAI's actions are far-reaching, with potential repercussions that could extend beyond the AI sector itself. As the company continues to lobby for government guarantees on its spending, it raises questions about the long-term sustainability of such a model and the risks faced by other companies operating in the same space.
That's like, building 100,000 data centers or something 
! And just to make sure they burn through all that cash, Sora 2 costs $15 million a day 
... I guess you could say OpenAI is on a roll, but in the wrong direction 
. Anyway, if Anthropic's model is sustainable and they're making more revenue, who needs billions in losses? 
Can someone just give me my $10 billion back from all these tech investments? 
they're basically setting themselves up 4 huge losses! $1.4 trillion is LOTS of cash & i think anthropic's approach is way more sus . they're not burning thru cash like crazy & still raking in the $$ 
anthropic seems to be doing it right with 300k corporate customers and a much lower valuation 
. And what's up with all those "seats" for ChatGPT for Work? Does anyone even know how many of them are actually being used? 
$1.4 trillion is insane! 
They seem to be doing things right by focusing on their subscriber base and generating revenue from that. It's all about being frugal and sustainable, you know? 
If they're not careful, they'll be the ones losing out big time 
And they're already projected to lose $74 billion by 2028 
, building a sustainable business model without sacrificing their sanity (or bank account). Can't help but think that ZIRP-era vibe is coming back to haunt them 
. It's clear they're trying to make a big splash and establish themselves as leaders in the AI game 
. But let's be real, burning through $1.4 trillion over 8 years? That's just crazy talk 
. It's a more measured approach that doesn't involve throwing all the money at the wall and hoping some will stick 
that's just crazy talk! I'm all for innovation and progress, but come on, OpenAI needs to get its financials in check ASAP 
... meanwhile Anthropic over here quietly raking in revenue from its corporate customers 
But what if they don't? What if it takes them even longer or they just can't cut it? $15 million a day for a video generation model is insane 
! $1.4 trillion is insane 
but burning thru cash that fast is just crazy 
What's next? They're gonna have to start renting office space on Mars 
for their Sora 2 video gen model 
?