OpenAI is rumored to have doubled its losses last year, and ChatGPT is like a "gold-devouring beast"

The latest news on May 4 reports that OpenAI doubled its losses last year while developing ChatGPT.

ChatGPT, the AI chat tool launched by the startup in November 2022, is the latest "star of the show. But how much has OpenAI invested in it to make it "popular"?

According to three people with knowledge of the company's finances, OpenAI's losses doubled to about $540 million in 2022. To develop ChatGPT, the company has poached some heavyweight employees from Google.

This reflects the high cost of training ChatGPT's machine learning models before it is officially launched.

100 billion more to raise

After ChatGPT launches, though, OpenAI could be burning through money even faster. The company's R&D and operating costs will continue to rise as more customers use its AI technology and as the company upgrades and trains for future versions of its software.

OpenAI is also keen to acquire new data sources for its software, which is another big expense. Data is necessary to develop AI tools, and OpenAI needs to pay for some data that is not currently visible on the Internet.

The issue of data ownership is fast becoming a fierce new "battleground" in the AI boom. Samsung Electronics, for example, is concerned about its proprietary data flowing into the data pools of various types of generative AI, and recently announced that employees are prohibited from using popular AI tools such as ChatGPT, Bard and Bing on company devices.

In addition, OpenAI has been hiring more engineers and sales and "poaching" from big companies like Apple and Google, which is also a big expense.

OpenAI CEO Sam Altman has privately suggested that the company may need to try to raise as much as $100 billion in the next few years to develop general-purpose AI tools that are advanced enough to make the company more profitable.

Altman also said Wednesday (May 3) that OpenAI will be the most capital-intensive startup ever in Silicon Valley.

Modest revenue size

Considering that the cost of developing AI is so large, it raises questions such as whether the AI company's revenues will cover the costs, in addition to whether other startups will be able to keep up with OpenAI.

In 2020, OpenAI spent at least $75 million on Google Cloud, before moving to Microsoft's Azure cloud. Earlier this year, it agreed to a $10 billion investment with Microsoft, which will provide OpenAI with cash and a credit line to the Azure cloud.

For now, OpenAI's revenue size remains relatively small relative to its costs. Still, some investors believe the company's software can lead the way and could be a moneymaker for the company at some future event.

In February, ChatGPT launched a paid version that is expected to grow in the hundreds of millions of dollars in annual revenue and exceed previous estimates. By comparison, the company's revenue last year was just $28 million.

Altman has previously said that after its software reaches a certain level of functionality, "it's basically like pushing a button, and then the profits come crashing in.