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Sam Altman’s OpenAI could go bankrupt in the next 18 months

MacDailyNews

Jan 15

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As OpenAI continues its meteoric rise — boasting billions in revenue from ChatGPT and API usage while dominating headlines — the company faces a stark financial reality that could threaten its very existence. In a new New York Times opinion piece this week, historian and financial expert Sebastian Mallaby warns that despite massive fundraising rounds and explosive growth, OpenAI is hemorrhaging cash at an unprecedented scale, with projections suggesting it could run out of money within the next 18 months if current burn rates persist and new capital doesn’t materialize.

This dire prediction for OpenAI highlights the high-stakes gamble of frontier AI development: enormous compute costs, relentless R&D spending, and losses in the billions annually — even as revenue surges. While OpenAI eyes eye-popping valuations and potential mega-rounds (including talks of $40–100B raises), the clock is ticking on whether investor enthusiasm can outpace the burn.

Sebastian Mallaby, senior fellow at the Council on Foreign Relations, for The New York Times:
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Generative A.I. businesses are not like the software successes of the past generation. They are far more capital-intensive. And while behemoths such as Google, Microsoft, and Meta earn so much from legacy businesses that they can afford to spend hundreds of billions collectively as they build A.I., free-standing developers such as OpenAI are in a different position. My bet is that over the next 18 months, OpenAI runs out of money.
According to reporting by The Information, the company projected last year that it would burn more than $8 billion in 2025 and more than $40 billion in 2028. (Though The Wall Street Journal reported that the company anticipates profits by 2030.)
Not even Mr. Altman can keep juggling indefinitely. And yet he must raise more — a lot more. Signaling the scale of capital that he believes he needs, OpenAI has committed to spending $1.4 trillion on data centers and related infrastructure. Even if OpenAI reneges on many of those promises and pays for others with its overvalued shares, the company must still find daunting sums of capital. However rich the eventual A.I. prize, the capital markets seem unlikely to deliver.
The probable result is that OpenAI will be absorbed by Microsoft, Amazon, or another cash-rich behemoth.

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MacDailyNews Take: No worries: Jony Ive’s always-listening OpenAI necklace will save them. /s

There is a very real possibility that as Creative Technology was to MP3 players, OpenAI will be to GenAI.

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