OpenAI targets $1.3 billion in annual revenue



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Summary

OpenAI CEO Sam Altman has announced internally that the company is targeting $1.3 billion in annual revenue, according to The Information.

That’s 30 percent more than the $1 billion in annual revenue leaked over the summer, which was already said to have exceeded investor expectations. The new figure suggests more than $100 million in monthly revenue.

The biggest revenue driver is subscriptions to ChatGPT Plus. Last year, without the ChatGPT Plus offering, OpenAI had revenue of only $28 million, with a loss of $540 million, according to The Information.

Due to the increase in revenue and rapid growth in recent months, OpenAI is estimated to have a new valuation of up to $90 billion. The goal is for employees to be able to sell their shares to outside investors at that level.

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ChatGPT is the revenue phenomenon of GenAI

What we do not know is what the operating expenses of GPT-4 and the like are, and whether and to what extent they exceed revenues. It is possible that despite rapid revenue growth, OpenAI is still losing money due to the high cost of generative AI and the investment in research and development of new models.

In addition, Microsoft shares in OpenAI’s revenue when GPT models run in the Microsoft cloud via the API. At the same time, competition is growing from open-source models such as Meta’s Llama and Google, which is entering the model market with its large multimodal Gemini models in the coming weeks. Every new service via OpenAI APIs is also competition for ChatGPT, even if it’s only a small one.

Perhaps that’s why OpenAI is already setting the course for diversification. The company is eyeing both the AI chip market and the end-user hardware business. The company is said to have concrete plans for both scenarios, although it could take years to develop the new segments.

ChatGPT’s great success in terms of revenue growth cannot be generalized to generative AI. A look at web statistics strongly suggests that the buzz around the new technology is mostly driven by ChatGPT. AI image service Midjourney is said to have reached $200 million in annual revenue and is profitable.

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