OpenAI could lose $5B this year and run out of cash in 12 months: Report

The ChatGPT maker reportedly will spend some $7 billion on AI testing this year.

OpenAI is running a costly business that could lose as much as $5 billion in 2024, putting the ChatGPT maker at risk of running out of cash within 12 months, according to an analysis by The Information. 

According to the report, which cites previously undisclosed financial data and people familiar with the business, OpenAI is on track to spend some $7 billion on artificial intelligence training alone, and another $1.5 billion on staffing. That far exceeds the reported expenses of rivals, such as Amazon-backed Anthropic, which expects a 2024 burn rate of $2.7 billion.

OpenAI’s lofty expenses could force the company to close on yet another financing round within 12 months to bolster its balance sheet, the report claims. OpenAI has already completed seven funding rounds, raising in excess of $11 billion, according to data from Tracxn — most recently a private round with ARK Investment Management in April for an undisclosed sum.

OpenAI did not immediately respond to requests for comment.

OpenAI launched ChatGPT in November 2022. The AI assistant quickly gained traction, exceeding 100 million weekly users. The artificial intelligence firm, which is based in the United States, announced the launch of a new generative AI model, dubbed “GPT-4o Mini,” on July 18.

Related: OpenAI launches new super-efficient, low-latency ‘GPT-4o mini’

OpenAI is reportedly also building an AI model capable of advanced reasoning, surpassing the capabilities of the current flagship GPT-4o. The new model, called “Strawberry,” will reportedly also exhibit more humanlike responses. 

The technology firm faces regulatory challenges, including a potential inquiry by the United States Securities and Exchange Commission tied to allegations of misconduct related to non-disclosure agreements. On July 23, US lawmakers sent a letter to OpenAI CEO Sam Altman expressing concerns about OpenAI’s safety standards and employment practices.

The letter, first obtained by the Washington Post, raises questions about the company’s perceived lack of transparency and asks if OpenAI will “commit to making its next foundation model available to U.S. Government agencies for pre-deployment testing, review, analysis, and assessment.”

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