OpenAI May Be in Major Trouble Financially
3 minute readPublished: Tuesday, July 8, 2025 at 8:20 pm
OpenAI's Financial Struggles Raise Concerns About AI Industry's Future
OpenAI, the company behind the popular chatbot ChatGPT, is facing significant financial challenges despite attracting billions in private funding. Since the public launch of ChatGPT two and a half years ago, the company has operated at a substantial loss. According to reports, OpenAI lost approximately $5 billion in 2024.
Despite these losses, OpenAI aims for $125 billion in annual revenue by 2029. This ambition contrasts sharply with its current financial state, prompting concerns about the sustainability of its business model. Tech critics like Ed Zitron have drawn parallels to the 2007 subprime mortgage crisis, suggesting a "subprime AI crisis" is brewing. They argue that AI companies are operating at a loss, fueled by massive investments from Wall Street, which are betting on future growth.
The valuation of ChatGPT, currently at around 30 times its revenue, reflects a high degree of optimism. However, critics suggest this valuation is based more on "magical thinking" than sound financial analysis. The potential consequences of this situation, according to Zitron, include widespread layoffs, price hikes, and a decline in the quality of software that relies on AI infrastructure.
This trend is already evident in the industry. Anysphere, the company behind Cursor, an AI code editor, recently implemented significant price increases despite raising substantial funding. This move has angered its user base. These price hikes are, in part, a result of pressure from companies like Anthropic, which has also increased its prices.
OpenAI faces similar pressures. With a vast user base, the majority of whom are free users, the company may struggle to generate sufficient revenue without implementing price increases. Recent moves, such as offering "priority processing" for businesses, suggest a shift towards monetization. However, regular users have already experienced limitations, such as restrictions on image requests.
The central question is not *if* price hikes will occur, but *when* and *how*. Critics believe that the current financial trajectory will not lead to profitability or sustainability for companies like OpenAI and Anthropic, potentially impacting their long-term revenue.
BNN's Perspective: The situation highlights the inherent risks in the rapidly evolving AI landscape. While the potential of AI is undeniable, the current financial model appears unsustainable. Higher revenue generation is needed to ensure the long-term viability of these companies and the broader AI industry, which will likely come with unforeseeable consequences to these companies and the businesses they serve.
Keywords: OpenAI, ChatGPT, AI, financial losses, funding, revenue, subprime AI crisis, price hikes, Anthropic, Anysphere, Sam Altman, tech industry, sustainability.