A recent analysis reveals that OpenAI could face serious financial challenges, potentially running out of cash by mid-2027. Economist Sebastian Mallaby highlights concerns about the sustainability of AI development economics due to high operational costs. OpenAI’s projected spending could reach $8 billion in 2025 and escalate to $40 billion by 2028, with profitability not expected until 2030. Competing against established tech giants like Microsoft and Google poses additional hurdles, as these companies can absorb losses while investing heavily in AI. Furthermore, the reliance on free-tier offerings complicates revenue generation and user loyalty, as users may abandon services for cost increases or ads. While the prospect of “agentic” AI could enhance user dependence and reduce switching, Mallaby warns that OpenAI’s substantial aspirations and infrastructure expenses may exceed its ability to quickly profit. With significant investments—like a reported $40 billion funding round—OpenAI’s long-term business model remains under close scrutiny.
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