OpenAI is spending an alarming amount of money – $620 billion annually – to power its AI models, despite only a third of the contracted 36 gigawatts coming online by 2030. This poses significant financial risks, with lenders expecting massive revenue growth and experts warning of an AI bubble that could collapse, causing disastrous consequences for the US economy.
The company faces increased competition from Google’s Gemini 3, which is expected to significantly drop OpenAI’s consumer market share by the end of the decade. Additionally, OpenAI needs to reach three billion ChatGPT users by 2030, a challenging goal considering user growth has plateaued. The company relies on paying ChatGPT subscribers for 70% of its annual recurring revenue, but only five percent of users currently pay.
To support new users, OpenAI will need to build more data centers, creating a vicious cycle that could eat into the company’s margins. If things go south, HSBC suggests that OpenAI may change its data center commitments to avoid a liquidity crisis. Despite this, experts remain bullish about the potential for “productivity-driven” economic growth.
The AI industry is facing scrutiny over sky-high valuations and meager revenues, with companies like Nvidia facing questions about their business models. OpenAI has a much steeper hill to climb, requiring it to create a profitable service while paying for data center expenses.
Source: https://futurism.com/artificial-intelligence/openai-financial-situation-nauseating