OpenAI, the AI studio that popularized AI among non-technical people, may be facing financial difficulties as its AI chatbot ChatGPT costs $700,000 daily to maintain. The company’s GPT products are losing customers, and ChatGPT’s website usage dropped significantly by July.
ChatGPT costs OpenAI $700,000 every day to keep going. GPT-4 and DALL-E2 cost extra. Microsoft’s $10 billion financing is keeping the AI bot alive.
OpenAI, the AI studio that popularized AI among non-technical people, may be in serious difficulty. According to Analytics India Magazine, Sam Altman’s AI development company may have to declare bankruptcy in order to become the face of generative AI with their AI chatbot ChatGPT.
When OpenAI registered for a trademark on “GPT,” many predicted its demise. OpenAI’s GPT products are losing customers despite the trademark not being acquired.
When ChatGPT website usage dropped from May to June, it was first ascribed to students being on summer holiday or the launch of the ChatGPT API, which encouraged users to design their own bots.
ChatGPT users dropped significantly by July. SimilarWeb reported a 12% dip in users from 1.7 billion in June to 1.5 billion in July. This data doesn’t include API use, which generates most of OpenAI’s revenue.
API cannibalization may explain this drop. Many firms discouraged employees from using ChatGPT but allowed them to use the API to incorporate the large language model (LLM) into processes.
OpenAI’s claim that API usage for tailored goods caused the user decrease is arrogant. Open-source LLM models are becoming more important.
Meta’s LLaMA 2 with Microsoft allows LLM commercial usage. Why would someone choose OpenAI’s expensive, proprietary, and restricted version over the more adaptive and free-to-use LLaMA 2, especially considering its potential advantages in certain scenarios?
OpenAI’s change from non-profit to profit-oriented and CEO Sam Altman’s lack of stock participation suggest profitability. The firm values profits more than Altman. After ChatGPT, OpenAI lost $540 million.
According to Investopedia, premier AI businesses including OpenAI, Anthropic, and Inflection should not contemplate IPOs because to their profitability. The research recommends 10 years of operation and $100 million in revenue for successful IPOs.
Microsoft’s $10 billion investment has sustained OpenAI. Analytics India Magazine believes OpenAI’s goal of $200 million in annual income in 2023 and $1 billion in 2024 appears optimistic considering its rising losses.
OpenAI’s financial prospects is unknown, even if switching to a subscription model produced cash. API purchases and use of GPT-4-based chatbots or DALL-E2 may generate cash, although the details are unknown.
OpenAI’s IPO may attract larger corporations, giving investors an exit plan. According to recent sources, OpenAI is still hiring and expanding, particularly in London.
In December, Altman monetized the AI startup and ChatGPT’s high costs. ChatGPT costs OpenAI $700,000 daily, according to reports. Microsoft and other new investors are covering these expenditures, which might strain their resources if OpenAI doesn’t become profitable soon.
OpenAI’s main AI competitors used to be Google or Meta. Musk’s xAI changed everything. Musk wants to build a chatbot to beat OpenAI. His “TruthGPT” idea, which avoids ChatGPT’s political slant, has attracted attention. Firstpost stated that Musk bought 10,000 NVIDIA GPUs to support his efforts.
GPU shortages complicate issues. Altman said the market’s GPU shortage is limiting the company’s model enhancement and training. OpenAI’s trademark application for “GPT-5” suggests they’ll keep training models. ChatGPT’s production has suffered as a result.
If OpenAI doesn’t get more money soon, it may have to file for bankruptcy by 2024.
This approach might let them get NVIDIA GPUs in the second quarter of that year and restart model training. In the meantime, financial losses are rising, user numbers are falling, legal conflicts are building, and production quality is degrading. OpenAI has difficult challenges.
Conclusion
OpenAI, the AI studio that popularized AI among non-technical people, may have to deal with challenges as it is facing bankruptcy. The company’s GPT products are losing customers despite the trademark not being acquired. ChatGPT website usage dropped significantly by July, with a 12% dip in users. OpenAI’s claim that API usage for tailored goods caused the user decrease is arrogant, as open-source LLM models are becoming more important. OpenAI’s change from non-profit to profit-oriented and CEO Sam Altman’s lack of stock participation suggest profitability. Investopedia recommends 10 years of operation and $100 million in revenue for successful IPOs. Microsoft’s $10 billion investment has sustained OpenAI, with a goal of $200 million in annual income in 2023 and $1 billion in 2024. OpenAI’s financial prospects are unknown, but API purchases and use of GPT-4-based chatbots or DALL-E2 may generate cash. If OpenAI doesn’t get more money soon, it may have to file for bankruptcy by 2024. In the meantime, financial losses, user numbers, legal conflicts, and production quality are degrading.
