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- Hacker News
- Is this surprising to anyone? I thought that was a given. I'm getting de-facto unlimited use of a model more expensive than Opus 4.8 for $20 a month.by eranation
- > de-facto unlimited (...) for $20 a month
Would love to hear some details on that one...
Or was that a typo and you meant the $200/mo plan instead maybe? That one I could believe, assuming no or frugal subagent use that is.
by perching_aix - I feel like I have a different $20 plan than everyone else. I have no problem hitting my 5 hour and weekly limits. Don’t get me wrong, it’s a great deal compared to API pricing, but it’s a far cry from “unlimited”.by 542458
- The scale of the numbers is exceptional, but the shape is pretty typical for a high-growth, scale startup with a big TAM where a winner can take most. And compute, supply constrained as it is for the foreseeable future, is absolutely a moat. I come away from this thinking OpenAI is actually in very good shape given that revenue is growing fast enough that break-even has a clear path without doing anything draconian.by mrcwinn
- If these numbers are right, it's actually not that bad. Cut r&d costs and they are mostly profitable.by smashed
- If they cut down on R&D they will be no better than the open source models you can run at cost yourself.by Gigachad
- I bet any FAANG spend is mostly R&D.
If it's not materials, not energy or taxes, not manufacturing, not licensing or rental fees, then I can only think of R&D.
by deepsun - While you cant discount 100% R&D they are close, agreedby 4d4m
- Actually reduce R&D to ZERO and they are still losing money.by mjamesaustin
- Cut down on the one thing they need to keep themselves relevant in this space?by vjsrinivas
- OpenAI can easily cut R&D costs by replacing engineers with Claude Codeby bijowo1676
- So you’re saying if you cut all the cost centers a company would only have profit centers? If you ignore all the losses you’ll only have profits?
- Yes if you ignore all the reasons why they’re horribly unprofitable, they’re profitable.
R&D costs are hurting profit side and while you can cut that one just becomes irrelevant overnight in this space if you do, hence the problem.
by cmiles8 - Revenue went from $3.7B to $13.07B — roughly 3.5x.
Operating loss went from ~$8.8B to ~$20.9B — roughly 2.4x.
Doesn't seem like a domesday scenario.
by muglug - just for completeness, I think the closer analogue is probably total expenses: $12.48 billion to $34 billion -- roughly 2.7x. But this is still pretty close to what you said, so I don't particularly disagree with the numbers.
I do wonder if this comparison is really meaningful. It looks like if they can grow infinitely, then at some point they should be profitable. However, that's already a somewhat sad story ("in the limit as x->inf, we'll actually _make_ money!"). And there are of course limitations. Anthropic, Google, open models etc are all real competitors, and it seems to me that there will only be one winner. If openAI is losing money faster than the others, then it may not survive long enough to reach that eventual profitability. And finally, the human population is limited. There isn't a true infinity that the pattern can extend to. If we've only reached 10% of the TAM that's fine, but if we're at like 70% (which personally I suspect is about right), then this looks bad.
- The AI companies also have a lot of space to grow their income (more ads, price hikes, ...). It seems realistic for them to turn profitable. But the market expected much more from these companies.by matusp
- I think it depends on a lot of things, not the least of wish is, this could be the worst their financials get, or depending how competitive this whole thing is, it could be the best:
https://www.reuters.com/technology/openai-considers-drastic-...
by mikgp - This news matters because investors should prefer safer investments than: well at least it's not a "doomsday scenario" grade.
- > Revenue went from $3.7B to $13.07B — roughly 3.5x.
> Operating loss went from ~$8.8B to ~$20.9B — roughly 2.4x.
> Doesn't seem like a domesday scenario.
Those two lines are moving up and to the right, but are not parallel.
It all depends on where those two lines meet (the break-even point): too far in the future and the company will be dead anyway. Almost all companies will eventually be profitable; the problem is that the majority of them will need constant cash injections to keep the lights on.
Like the old aviation saying: even a brick will fly if it has enough thrust. doesn't make the brick a plane, though.
by lelanthran - > Doesn't seem like a domesday scenario
Ceteris paribus, those figures imply a $45bn loss this year, $90bn loss next year and $110bn loss in 2028 before breakeven in 2029.
That's $250bn of losses to be financed from 2026 onwards. (They raised ~$120bn, $25bn up front and the rest based on milestones. So Another ~$125bn uncovered.) That only works if OpenAI stays a fundraising darling. So not a doomsday sceanario. But perilous, and dependent on short-term trends extending into long-term curves.
- Relevant: https://www.ft.com/content/e15b0d7e-ff6b-4f16-ba7a-4068feddb... this uses the same sources and answers more honestly and Ed Zitron doesn't touch on this.
> As OpenAI’s worth rose, the increased value of those investor rights created a roughly $30bn charge, added the person. The charge is not expected to recur following the restructuring, they said.
> Stripping out the charge and other non-cash expenses, such as stock-based compensation of staff and computing credits from Microsoft, OpenAI’s losses were $8bn, according to the person.
by simianwords - My takeaway from this is that it's incredibly validating as a business model. Inference is _highly_ profitable. Of course, like any company that has ever tried to grow at breakneck pace, you run at a loss until you "win."by mvkel
- >> Inference is _highly_ profitable.
Totally untrue.
by root-parent - Isn't this what all of the big companies that spend a lot on R&D and engineers promise?
And then the reality turns out not to be the case - you have to continuously spend on R&D to avoid getting your lunch eaten by someone else.
This isn't a social media network with lockin either. People can and will just switch to whatever whenever they feel like it. Maybe it becomes a defacto standard like google but if someone is much better than you, well...
by Panzer04 - Yes, it is like a new era - the startups have huge direct revenue on real products instead of "users" which yet to be monetized.
And the network effect which ruled for the last 20 years seems to have relaxed its death grip just a bit (of course it is still there as having more customers using your tools and models provides more training data, etc., yet the current network effect doesn't seem to have that high exponential value like before)
by trhway - > My takeaway from this is that it's incredibly validating as a business model. Inference is _highly_ profitable.
The problem is you can't just separate training costs from inference costs. If OpenAI just didn't train a new model for the next five years, sure, they'd do OK. Assuming all those dirt cheap Chinese models nipping at their heels don't make up the gap while OpenAI is resting on their laurels.
Without being a frontier model (read: continuous, incredibly expensive training), they effectively don't have much to sell. So inference and training costs are intertwined to some extent.
by xienze - ”The company reports over 900 million weekly active users of ChatGPT, though only about 50 million of those are paid subscribers.”
With so many free models available the ai companies are going to struggle to convert active free users to paid.
by fsuts - Crazy that they have 50 _million_ paying subscribers and are still losing money.by whalesalad
- None of the free models offer anything even remotely close to the output you can get on a relatively inexpensive model.
I think that AI is going to become just another utility people pay to stay relevant. Same as their internet, electricity or gas.
by JimTheMan - They won't try to. ChatGPT is already starting with ads, which is potentially far more profitable (as evidenced by the fact that the most profitable company of all time makes 90%+ of their revenue through ads).by dtnewman