A new analysis suggests that OpenAI could face serious financial pressure and run out of cash by mid-2027raising questions about how sustainable the economics of frontier AI development really is. the argument comes from Sebastian Mallaby, economist and senior fellow at the Council on Foreign Relationswho recently examined the company’s spending patterns and long-term financing challenges.
The concern is closely linked to the high cost of building and operating advanced AI systems; OpenAI is expected to spend heavily on computing infrastructure, research, and training large-scale models. External projections have estimated that the company could burn around 8 billion dollars in 2025with expenses that could amount to 40 billion dollars by 2028. At the same time, reports indicate that the company expects to achieve profitability only if 2030which creates a significant financing gap in the coming years.
Mallaby also highlights How difficult it is for AI-focused startups to compete financially with long-established tech giants.—companies like Microsoft, Meta or Google.
These rivals already generate huge profits from existing businesses, allowing them to invest heavily in AI while absorbing short-term losses, but OpenAI, by comparison, must rely more on continued investment and fundraising to maintain its pace of development.
Another factor is The challenge of turning widespread AI adoption into stable revenue.from Currently, many users access AI tools through free tiers. and You can change platforms if prices riseads appear or limits are introduced. This makes it difficult for AI companies to build long-term loyalty in the short term.
However, the analysis also notes that this dynamic could change if “agent” AI becomes more integrated into daily life, which could increase user dependency and reduce switching.
Still, Mallaby maintains that OpenAI’s large-scale ambitions and infrastructure costs may outpace its ability to generate enough profits quickly. While OpenAI has attracted massive investments (reportedly including a $40 billion funding round), its long-term business model remains under scrutiny as costs continue to rise.
Filed in . Read more about AI (Artificial Intelligence), ChatGPT and OpenAI.
