OpenAI, a leading force in artificial intelligence, has seen its annual revenue exceed the $2 billion mark, propelled by the widespread adoption of its flagship AI product, ChatGPT. This milestone places the San Francisco-based startup among the fastest-growing tech companies in history.
As of December 2023, OpenAI’s annual run rate hit $2 billion, according to sources familiar with the company’s finances. Backed by Microsoft, OpenAI anticipates doubling this figure by 2025, driven by strong interest from corporate clients eager to integrate OpenAI’s generative AI tools into their workplaces, reports the Financial Times.
This remarkable growth trajectory is set to position OpenAI alongside a select few Silicon Valley firms, including Google and Meta, which achieved $1 billion in revenue within a decade of their inception.
Initially launched as a non-profit AI research lab in 2015, OpenAI transitioned into a commercial juggernaut with the establishment of a commercial arm in 2020. By October of the previous year, its annual revenue reached $1.3 billion, with sales growth continuing to accelerate, according to The Information, a tech news outlet.
Despite internal upheavals in November, when OpenAI’s board briefly ousted CEO Sam Altman before reinstating him, the company continues to ride the AI boom initiated by ChatGPT’s launch in November 2022. Altman revealed that 92% of Fortune 500 companies have used OpenAI products, including ChatGPT and the foundational AI model GPT-4, with the chatbot boasting 100 million weekly users.
The surge in interest in generative AI—systems capable of creating code, text, images, videos, and analyzing information from user prompts—has been significant among both consumers and businesses.
Competitors, including tech giants like Google and Meta, as well as startups such as Anthropic, Mistral, and Cohere, have begun marketing their AI products. Google announced its new AI system, “Gemini,” accessible through a $20 monthly premium subscription.
Despite its financial success, OpenAI continues to incur losses due to the high costs of building and operating its models. The company anticipates that expenses will continue to outpace revenue growth as it develops more sophisticated models, likely necessitating tens of billions more in funding.
OpenAI’s models also power Microsoft’s AI assistant, CoPilot, for Microsoft 365 enterprise users, encompassing Office, Excel, and PowerPoint applications introduced over the past three months. The company shares profits with Microsoft on sales made through its investor’s platform.
While Microsoft has not disclosed CoPilot’s sales or user numbers, it reported that 18,000 customers purchased OpenAI software via its Azure platform in October.
Recently, OpenAI employees participated in a stock sale that valued the company at $86 billion, nearly triple its value from April.
Altman is exploring ways to boost semiconductor supplies, crucial for AI companies aiming to build cutting-edge models and reduce OpenAI’s costs. He stated on X (formerly Twitter), “Building large-scale AI infrastructure and a flexible supply chain is critical for economic competitiveness. OpenAI will try to help!”
According to the Wall Street Journal, Altman is in talks with investors, including the UAE, to raise funds for a tech initiative aimed at increasing global chip manufacturing capacity and AI capabilities. Sources suggested that the project might require raising between $5 and $7 trillion.
Altman’s fundraising efforts aim to overcome challenges hindering OpenAI’s growth, such as the scarcity of AI chips needed for large language models like ChatGPT. The Semiconductor Industry Association forecasts a 13.1% jump in global chip sales to $595.3 billion this year, after a roughly 8% decline in sales in 2023.
