AI Companies Still Burning Billions as OpenAI Losses Mount Despite Revenue Growth

AI is fun and cool when it creates useful things for you or answers tough questions quickly and well (let’s not focus on AI slop and false claims at the moment), but that doesn’t mean AI businesses are financially sustainable or sensible. AI companies are still heavily subsidizing their broad use, with the benefits for them being growing user bases and sky-high valuations. These companies are burning billions of dollars each quarter on the hype and promise that they will rule the world one day (quite literally).

OpenAI, the company behind ChatGPT, reported this week that it had $10.9 billion in operating losses last quarter. That’s up from $10.1 billion in operating losses in the second quarter.

One might think that means not a lot changed, and certainly nothing positive. However, the company’s revenue was actually up by 50%! So, even with a huge boost in revenue, gigantic losses grew! Furthermore, the company was apparently even using a tool of “last resort” here.

OpenAI started running ads in ChatGPT, something that the company was adamantly trying to avoid. CEO Sam Altman previously called the proposal to run ads “unsettling” and claimed that the company would only go that route as a matter of “last resort.” Well, it seems the company has reached that point of last resort. And that can’t be a good thing, right? Considering that OpenAI is still losing billions of dollars a quarter, it’s even more concerning. What comes after a “last resort” effort to turn finances around?

Frankly, I wish we could spend billions of dollars a quarter to make CleanTechnica into a behemoth of a media organization! That would be amazing — imagine all of the stuff we could do! But what are the chances we’d be losing billions of dollars a quarter in doing so? And how long could we operate like that before external sources of funding stopped covering the bill?

As we know, OpenAI is one of the “leaders” of the AI industry. If it is struggling like this, who isn’t, and what does that mean for the industry overall and where it’s headed?

The one big player that has been raking in the dough in the midst of this enormous AI craze is NVIDIA, and look at what’s now happening there! Where are things going to go with that company?

“The news comes not long after controversy over how OpenAI was projecting its earnings. In October, the company reported an annualized revenue, an estimate of how much money it will earn over a year, of about $50 billion — which was $20 billion short of what it told investors only a month before,” Futurism adds. “The discrepancy was taken as an admission that the business models of AI companies weren’t as robust as their leadership was making them out to be, fueling speculation of an impending bubble.”

Why can’t the leaders of these companies just ask their chatbots how to turn a profit and implement their answers? Well, one of the answers might have been regulatory capture and blocking others from entering the market, but that dream may now be out the window. In my humble opinion, 2027 could be a very interesting year for AI companies, and that might involve a big popping noise.