OpenAI losses nearly double to $540 million as costs build: Report

There are also steep costs involved in developing large language models (LLMs) and training them, which form the backbone of ChatGPT, a generative chatbot.

OpenAI launched ChatGPT last November, which has since taken the tech world by storm with major IT players hopping on the generative AI bandwagon.

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“Even as revenue has picked up, reaching an annual pace of hundreds of millions of dollars just weeks after OpenAI launched a paid version of the chatbot in February, costs are likely to keep rising as more customers use its AI technology and the company trains future versions of the software,” the report said.

Despite revenue growth from paying customers, costs are expected to surge as LLMs need continuous training to keep up with queries being fed by users, it noted.

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Microsoft has invested about $10 billion in OpenAI since 2019. OpenAI founder Sam Altman has reportedly suggested that the venture will be “the most capital-intensive in the history of Silicon Valley” and might require fundraising of about $100 billion.“The San Francisco company’s recent pace of revenue means it is likely to exceed a projection it made last year that 2023 revenue would jump to $200 million. In 2022, by comparison, revenue was just $28 million, mainly from selling access to its AI software — the same kind that later powered ChatGPT — to app developers,” the report stated.

In addition, Microsoft will also be eyeing a sizeable portion of these revenues after it “previously negotiated rights to 75% of OpenAI’s future profits until its principal investment is paid back and 49% of profits after that until it hits a theoretical cap”. Further, Microsoft has obtained the rights to resell OpenAI’s software to its own customers through Azure and use it for its search engine Bing and apps like Word and Outlook.