OpenAI projects $115B cash burn by 2029
What's the story
OpenAI has dramatically increased its projected cash burn through 2029 to a whopping $115 billion, according to The Information. This new estimate is a staggering $80 billion higher than what the company had previously anticipated. The sharp increase comes as OpenAI plans to ramp up spending on the artificial intelligence (AI) technology that powers its popular ChatGPT chatbot.
Financial forecast
To spend over $8 billion this year
OpenAI, now one of the world's largest cloud server consumers, expects to spend over $8 billion this year. This is $1.5 billion more than what it had projected earlier this year. To manage its rising costs, the company is looking to build its own data center, server chips, and facilities to power its technology.
Strategic alliances
Plans to produce its 1st AI chip next year
OpenAI is gearing up to produce its first AI chip next year in collaboration with US semiconductor giant Broadcom. However, the company plans to use this chip internally instead of offering it to customers. In July, OpenAI expanded its partnership with Oracle for a planned 4.5-gigawatts of data center capacity as part of the Stargate initiative, a project worth up to $500 billion and 10 gigawatts involving Japanese tech investor SoftBank Group.
Future outlook
Spending expected to reach $45 billion in 2028
OpenAI's cash burn is expected to more than double to over $17 billion next year, which is $10 billion higher than its earlier projection. The company's spending is projected to reach $35 billion in 2027 and $45 billion in 2028. Along with Oracle, OpenAI has also added Google Cloud as one of its suppliers for computing capacity.