As Fortune Magazine put it, November 12:
OpenAI says it plans to report stunning annual losses through 2028—and then turn wildly profitable just two years later"
OpenAI is plotting a dramatic arc toward profitability through the end of the decade, but that growing won’t come without some pain. The company reportedly expects to rack up massive annual losses each year, including roughly $74 billion in operating losses in 2028 alone, then pivot to meaningful profits by 2030, according to financial documents obtained by The Wall Street Journal.
The documents, which were shared with investors this summer, reveal an aggressive growth strategy that hinges on massive upfront investment in computing infrastructure, chips and data centers—spending that CEO Sam Altman has described as necessary to meet what he sees as insatiable demand for AI capabilities. The company anticipates total spending of roughly $22 billion this year against $13 billion in sales, resulting in a net loss of $9 billion—meaning OpenAI spends approximately $1.69 for every dollar of revenue it generates.
But the financial trajectory only gets steeper before it improves. The documents show OpenAI projects that by 2028, its operating losses will balloon to roughly three-quarters of that year’s revenue, driven primarily by ballooning spending on computing costs. That’s the same year competitor Anthropic expects to break even, according to WSJ.
The numbers underscore the stark divergence between the two most valuable AI startups. While both companies currently burn cash at similar rates relative to revenue, their paths forward split dramatically. Anthropic forecasts dropping its cash burn to roughly one-third of revenue in 2026 and down to 9% by 2027. OpenAI, by contrast, expects its burn rate to remain at 57% in 2026 and 2027.
OpenAI’s plan relies on what amounts to a bet on dominance. The company recently announced it has signed up to $1.4 trillion in commitments over the next eight years for computing deals with cloud and chip giants. It’s spending almost $100 billion on backup data-center capacity alone to cover unforeseen demand from future products and research.
“Demand for AI exceeds available compute supply today,” an OpenAI spokesman told WSJ. “Every dollar we invest in AI infrastructure goes to serving the hundreds of millions of consumers, businesses, and developers who rely on ChatGPT to get more done.”....
....MUCH MORE
And the headliner, from Techstrong.ai, December 1:
OpenAI, the company that ignited the artificial intelligence (AI) boom with ChatGPT in 2022, faces a financial predicament that dwarves even the harshest level of criticism against it.
The AI pioneer needs to secure at least $207 billion in additional funding by 2030 simply to continue operating at a loss, according to recent analysis from HSBC’s software and services team.
The numbers paint a stark picture of unsustainable growth. OpenAI recently committed to a $250 billion rental agreement with Microsoft Corp. and a $38 billion contract with Amazon.com Inc. for data center capacity. HSBC projects these commitments will translate to annual rental costs of $620 billion, potentially ballooning to $1.4 trillion by 2033 — exceeding Saudi Arabia’s GDP.
The spending spree stands in sharp contrast to the company’s revenue trajectory. CEO Sam Altman said OpenAI’s annualized revenue is approaching $20 billion in 2025 – less than 10% of the $288 billion total cost of its Microsoft and Amazon data center agreements alone. The compute costs projected for 2033 would be roughly 70 times current revenues, before accounting for staffing, research and development, energy, water, or property expenses.
The business model presents a fundamental challenge: Only about 5% of ChatGPT’s user base currently pays for subscriptions, yet these paying subscribers account for approximately 70% of annual recurring revenue. HSBC estimates OpenAI would need to reach three billion users by 2030 and convert 10% to paid subscriptions to approach sustainability — ambitious targets given that user growth appears to be plateauing around 800 million weekly active users.
Competition adds another layer of pressure. Google’s recent Gemini 3 launch has intensified the battle for market share, with HSBC predicting OpenAI’s consumer dominance will decline substantially by decade’s end. Meanwhile, dozens of competing platforms are vying for the same limited data center capacity, potentially driving costs even higher.
The company’s partners are shouldering enormous debt to support OpenAI’s expansion. An analysis by the Financial Times reveals suppliers of data centers, chips, and computing power to OpenAI have accumulated approximately $96 billion in debt. This includes $30 billion borrowed by SoftBank Group, Oracle Corp., and CoreWeave, and $28 billion in loans taken by Blue Owl Capital and Crusoe, with another $38 billion in potential financing under discussion.
CoreWeave’s situation exemplifies the precarious nature of OpenAI’s debt-fueled growth. The company reported $14 billion in current and non-current debt, plus $39.1 billion in future lease agreements, while projecting just $5 billion in revenue for this year. The five major hyperscalers — Amazon, Google, Meta Platforms Inc., Microsoft, and Oracle — have collectively taken on $121 billion in new debt this year to fund AI operations, more than quadruple their average debt issuance over the previous five years....
....MUCH MORE
