OpenAI needs $207B to stay afloat
What's the story
OpenAI, a leading artificial intelligence (AI) company, may need to raise a whopping $207 billion by 2030 just to stay in business. The estimate comes from HSBC, a British multinational financial services giant. The prediction is based on OpenAI's projected spending on data center infrastructure and compute costs as well as its expected revenue generation capabilities.
Financial forecast
Projected annual data center costs
HSBC estimates that OpenAI's annual data center costs could hit a staggering $620 billion. This figure comes with the caveat that the company has signed contracts for more computing power than it currently has access to. The bank also predicts that OpenAI's customer base, currently at 800 million, could grow to three billion by 2030.
Revenue expectations
Revenue projections and potential shortfall
HSBC estimates that OpenAI could convert 10% of its projected customer base into paying customers by 2030. This is double the company's current rate of 5%. The bank also considers potential advertising revenue from LLM firms capturing about 2% of the total digital ad market in the coming years. Despite these optimistic assumptions, HSBC predicts a funding shortfall for OpenAI by 2030.
Revenue analysis
HSBC's revenue projections for OpenAI
HSBC predicts that OpenAI could generate around $215 billion in annual revenue by 2030. This is slightly higher than the company's own projections of about $200 billion annually by the end of the decade. Despite these optimistic forecasts, HSBC still sees a funding deficit for OpenAI, estimating it will need to raise an additional $207 billion just to keep operating at a loss.
Potential strategies
OpenAI's options to reduce funding gap
OpenAI has a few options to close its funding gap, none of which are particularly attractive. The company could scale back on some of its data center commitments to cut down on costs. Alternatively, it could exceed the already optimistic revenue projections set by HSBC. However, these scenarios seem unlikely and not something the company can easily control.