Leaked OpenAI financials show $38.5B loss and compute burn

https://runtimewire.com/article/openai-leaked-financials-altman-compute-burn

221 263 1 month ago

Companies losing that much money a year shouldn’t be allowed to IPO. It leaves the public markets holding the bag.

An IPO doesn't mean public is forced to buy the stock. There is a choice for funds or individuals and if they chose to buy it, they should be allowed to in an open market.

The other side of this are companies like Uber where (if we go by your logic), the public markets made a killing betting on a company that had massive losses. Should Uber also be blocked from an IPO even though objectively it turned out great?

Investing and markets will always decide between risk and reward. The risk of OpenAI is that it will never find profitablity but the potential rewards outweigh that in the current market perception.

In fact, the argument kind of shifts here, OpenAI can afford to IPO at this condition and still expect strong subscription precisely because its OpenAI. If it was some idk cooking appliance company with no exponential future payoff, the market would laugh and reject that IPO.

They can do that to OpenAI too but all signs say they wouldn't. You can still short the stock once it hits public if you really believe in the downfall of OAI in the future.

appplication• 1 month ago

Except certain indices are indeed forced to buy if the stock otherwise meets inclusion criteria, this was a somewhat controversial topic with the recent spacex IPO.

HDBaseT• 1 month ago

You will be left holding the bag with regards to your 401k, Superannuation and other non-directly managed investments.

thebrid• 1 month ago

Why exactly? Isn't the primary reason for having public markets that companies can sell equity to fund growth?

The stock market has companies from massive to tiny. Each investor has the right to choose whether or not to invest in any one company. Some might be best served by investing only in profitable blue chips. For others, investing in IPOs is appropriate.

Your ire might be better directed at index companies who change seasoning rules right before a big IPO forcing unsuspecting investors to invest in unsuitable companies. And kudos to indexers like S&P who do not change the rules.

chillfox4• 1 month ago

ArsTechnica has a nice graph showing it

https://arstechnica.com/ai/2026/06/leaked-financial-docs-sho...

And I believe this is the actual source

https://www.wheresyoured.at/exclusive-openai-financials/

jofzar2• 1 month ago

One of these two should be the main link tbh

watwut• 1 month ago

The Zitrons was main link yeasterday. Most claimed it is nothing burger and Zitron bullshits, has nothing there and is annoying. Shrug.

_spduchamp• 1 month ago

From the Ars Technica article... OpenAI’s headline “net loss” number of just over $5 billion in 2024 ballooned to nearly $39 billion in 2025. But the 2025 number includes a significant accounting charge related to investor valuations that shifted amid the company’s 2025 conversion to a for-profit structure. The Financial Times cites “a person familiar with the matter” in reporting that this non-recurring charge was approximately $30 billion and that OpenAI’s 2025 net loss amounted to a more reasonable-looking $8 billion without it.

Huh? Where did $30 billion go?

grebc3• 1 month ago

Written off.

They might not have spent $30b but they likely valued their asset base at >>> $30b+ and had to adjust that at the time of converting to for profit, is how I read it.

“One time non-recurring” is also just accounting double speak that lets executives cover up dumb stuff while sounding plausibly OK.

ThrustVectoring2• 1 month ago

Profit and loss tracks changes to the fair price of purchasing the business, not operational cash flow. The $30b didn't go anywhere since it's not cash flow, it's acknowledging that someone who purchases OpenAI today would be on the hook for $30b more of future ownership dilution than before 2025.

datadrivenangel• 1 month ago

They promised the former investors $30b in equity, which is like taking a loan accounting wise.

Garlef• 1 month ago

This also shows that 2025 paid for 2024.

Unless they increased their spending even more, "all they have to do" is cover 2025 with the 2026 revenue?

chillfox4• 1 month ago

Do you think they can cover 2026 with 2027 without raising more money?

Or is this more like a bonfire that requires more fuel to keep burning?

kfarr• 1 month ago

Just let go of the entire R&D team and then you have a 50% margin business.

UPDATE: Also bad news, you need to let go of all of sales and marketing and G&A. And THEN it's a 50% margin business.

chillfox4• 1 month ago

Can't do that.

If they get rid of R&D, then someone else will make a better model and we will all switch to using that model.

If sales & marketing covers subsidies and bribes then they cant get rid of that either. Get rid of the bribes and they will be shut down. Get rid of the subsidies and we will all switch to someone cheaper.

nicce2• 1 month ago

6 billion to sales and marketing…?

throw310822• 1 month ago

OpenAI's spending mix shows why. The reported 2025 figures include $7.5 billion in cost of revenue, $19.18 billion in research and development, $5.73 billion in sales and marketing, and $1.57 billion in general and administrative expense

How the hell did they spend 5.7 billion in "sales and marketing"?

chillfox4• 1 month ago

Might be bribes and subsidies

vkou5• 1 month ago

Discounted contracts for big clients? Commissions? Both?

If this can be trusted, they are selling $1 for ~95 cents, and are spending $3 on R&D. This is... Not an unsustainable business model as long as the money keeps flowing.

treis• 1 month ago

This is like Uber all over again.

OpenAI is selling $1 for $2 and spending ~$5 to make that happen. The question is if they get to selling $1 for $2 long enough to make they're investment back.

eab-• 1 month ago

they're spending like 9 figures on a single marketing agency - this doesn't surprise me whatsoever

CamperBob2• 1 month ago

Baksheesh to keep Trump off their backs?

trick-or-treat• 1 month ago

You say that like it's a bad thing but it's a show of respect. Why shouldn't Trump receive a tribute like any other local warlord?

simonw7• 1 month ago

Greg Brockman spent $25m on that out of his own money, it won't show up in the OpenAI figures. https://www.theverge.com/ai-artificial-intelligence/867947/o...

jofzar2• 1 month ago

I wonder if that includes discounts/commissions for enterprise api bundling (ie cheaper for partner company XYZ if they include openai in their app)

feverzsj• 1 month ago

Literally, the largest scam ever made.

grebc3• 1 month ago

Crypto certainly holds the crown in my books, but this is getting up there.

nl9• 1 month ago

Revenue is higher than cost of revenue and revenue is growing faster than cost of revenue.

We know OpenAI is forecasting $25-30B revenue for 2026. They will be very close to breaking even at those number.

Given Anthropic has forecast more revenue than OpenAI and we know has spent less on R&D (cite their desperate scramble for compute capacity!) the rumours of them being profitable this year seem very credible.

vkou5• 1 month ago

Sales and marketing have to be added to the COR, which makes COR slightly > Revenue.

gamblor9562• 1 month ago

That's only true once they become public. As a private entity they can calculate COR any reasonable way that their investors are okay with.

(For tax purposes for most businesses it doesn't matter whether an expense is CORS or not.)

danielmarkbruce20• 1 month ago

No, no they do not. Those are operating expenses. This is accounting 101.

mrcwinn• 1 month ago

That’s not how that works.

reinitctxoffset5• 1 month ago

Anthropic has a durable advantage that OpenAI does not, as much as they choose to squander it to pump the numbers.

They were first on a few things but the tell is the coherence of the thinking traces of Claude. You have to put a loss on that. GPT 5 series thinking traces are creepy, Gemini thinking traces are disturbing. They both represent forced discontinuities on the policy gradient.

Claude is good at tool use because it's gigantic and well-labeled, but the reason you pay the premium is for a thinking partner, not a tool user.

Claude Code is the cancer that will kill the patient, Boris is the the Kardashian version of Karpathy, with less business sense.

locusofself• 1 month ago

You lost me in the last sentence there. What do you mean?

ElFitz• 1 month ago

Claude Code is the cancer that will kill the patient, Boris is the the Kardashian version of Karpathy, with less business sense.

I am not sure I understand.

didip• 1 month ago

Is this AI bot? So annoying that bots can join in HN conversations.

Bolwin• 1 month ago

None of them even expose thinking anymore. You're seeing a summary

senordevnyc• 1 month ago

Can you at least ask your owner to upgrade your model? Ideally at least Sonnet-level.

rvz2• 1 month ago

Imagine still saying this after open weight models being released everywhere and the likes of DeepSeek keeping their prices at the lowest possible for more than good enough intelligence that even Microsoft is migrating to deploy DeepSeek's models.

w29UiIm2Xz• 1 month ago

What's the adage, it is difficult to get a man to understand something, when his salary depends upon his not understanding it

LeFantome• 1 month ago

Looking forward to GLM-5.2 in OpenCode.

But a lot of other people are going to happily shell out for Opus 4.8 at way higher prices.

NetOpWibby• 1 month ago

Microsoft has been dead last at everything for decades, so that point isn't surprising.

nullbio2• 1 month ago

I think OpenAI will still maintain the lead for at least another few years.

The cost of hardware still needs to dramatically drop for open-weight models to be viable for local usage. Even with the release of things like Nvidia DGX Spark and Ryzen AI Halo, you'd likely want a few of them to run agents in parallel.

Sure, you can use cloud hosted variants of models like DeepSeek etc at API rates, but subscriptions still come out on top for bulk usage. GPT is already tightly integrated into peoples workflows, has wide adoption, has good tooling for developers, etc.

Plus there's nothing stopping them from competing on a price level if they really feel the need. It just means they might burn more cash in the short term.

nl9• 1 month ago

I use DeepSeek. I'm very familiar with open models. I run a popular benchmark to check their progress.

DeepSeek is somewhere between Sonnet and Opus in capability, for much lower price.

Their $0.87 per million output tokens is one of the few API offerings that is probably subsidized (the break-even price is probably around $2 judging by[1])

I think Anthropic and OpenAI's margins will erode some over time. But I think they are very profitable now on the API prices they are charging, and their margins will remain healthy.

Put it like this: AWS is a very expensive way of getting compute, and there are numerous competitors that are much cheaper.And yet AWS is very profitable.

[1] https://openrouter.ai/deepseek/deepseek-v4-pro#providers

surgical_fire5• 1 month ago

Revenue is higher than cost of revenue and revenue is growing faster than cost of revenue.

That's not necessarily true.

It depends on two things that are impossible to derive from the leaked numbers:

1 - How much of their compute costs are subsidized.

2 - How much of that R&D chunk can actually be reduced for the company to continue working. What goes into "R&D"? Is that only things such as training for new models? This is impossible to determine from those numbers alone.

If those numbers are true, they would not be "close to profitability". They would be profitable, period.

This does not explain why they need to raise money like crazy. It would be possible to train new models at a more sustainable pace without the need to jack up prices at all, only with the difference in between "Revenue minus Cost of Revenue".

They also wouldn't need to be on a mad race to IPO and dump this into the public market.

To be frank, the more I look at those numbers, the more I think this is completely unsustainable.

disgruntledphd2• 1 month ago

Is that only things such as training for new models?

It feels like cost of revenue should account for training, but I'm not an accountant so who knows?

nl9• 1 month ago

All model training is in R&D

How much of that R&D chunk can actually be reduced for the company to continue working.

Worth noting that almost all engineering (including software engineering) is always included in R&D.

Development is important! Most software (and indeed engineering!) companies couldn't continue if they stopped R&D.

Ford couldn't continue as a company without R&D.

BosunoB• 1 month ago

13 billion in revenue, 7.5 in cost of revenue. Can we finally put to bed the idea that inference is subsidized?

simoncion2• 1 month ago

13 billion in revenue, 7.5 in cost of revenue.

and 7.81 billion in R&D from last year. I don't know how long it took to build the weights for the current model, or exactly how much that costs, but it's certainly more than zero days and zero dollars.

I also doubt that OpenAI could set that R&D expense to zero and survive without an agreement from Anthropic that they'll do the same... so that R&D expense can't be ignored when figuring up the total cost of the current model.

bgirard2• 1 month ago

You're missing the point. There was a lot of debate around if inference was subsidized or not. And that's a huge point to confirm in the public discourse.

Ritewut3• 1 month ago

It is subsidized by gov contracts. Everyone who has common sense immediately said the real money is Altman getting into the governments pants which is why he and Brockman lobby so hard. You take away those contracts and OpenAI is dead in the water.

simonw7• 1 month ago

Anthropic are apparently making more revenue than OpenAI, and their government contracts have famously been curtailed.

bgirard2• 1 month ago

SpaceX was said to be subsidized by gov contracts. Look at where that got it...

spongebobstoes5• 1 month ago

this just isn't true, openai is largely (probably 80%+) consumer revenue in 2025

missedthecue• 1 month ago

What? You believe that if you remove government contracts they're selling tokens below cost?

Eufrat• 1 month ago

We have no idea what these terms mean and Ed Zitron specifically points out there is no explanation for what they mean in the reviewed documents.

Given that, no, this question is still open.

ElProlactin• 1 month ago

Ed Zitron claims to not know what terms mean, but that doesn't mean his ignorance is wisdom.

You can just run his content through AI to get a more balanced flash take. Example:

Zitron repeatedly describes OpenAI as having "removed" costs — $3.74B in 2024, $17.87B and $3.95B in 2025 — via "net loss attributable to noncontrolling members capital," and says "it's unclear what this means." This is standard consolidated-statement mechanics, not a maneuver. When a parent consolidates entities it doesn't wholly own, the slice of losses belonging to other equity holders is split out as "noncontrolling interests." Nothing is removed or hidden; the total loss is unchanged, it's just allocated. Framing it as OpenAI "lowering" its loss "by removing costs" implies something sketchy where there's only routine GAAP. Saying "I will not speculate further" while leaving that insinuation hanging is the rhetorically convenient version of restraint.

For what it's worth, I think AI is a "bubble" and am not convinced at the long-term sustainability or viability of many of these companies but that doesn't mean that every armchair critic actually has the financial expertise to make accurate arguments.

I mean, his whole sensationalized 8X headline is based on a non-cash conversion charge, which is literally the biggest straw man you can find in the financials. He chose it because he's editorializing even as he leads his post with "I am not going to do very much editorializing". Hilarious.

maxnevermind3• 1 month ago

I guess that is good, competition should lower the margins with the time as it doesn't seem like any of AI labs have a particularly strong moat.

nullbio2• 1 month ago

I feel like the labs and their army of bots are responsible for spreading the "inference is subsidized" narrative. It plays right into their hand and justifies high prices and price increases. Anthropic in particular loves milking people.

lukeschlather• 1 month ago

The R&D expenditure seems reasonable, and the revenue numbers seem realistic. I have no trouble believing they can be profitable by 2030 or much sooner. What I don't get is how you get from $30B in revenue to a nearly $1T valuation, but that seems almost level-headed compared to SpaceX, and it's not like any of the big tech companies' valuations make much sense in the context of their revenue.

philistine• 1 month ago

What I don't get is how you get from $30B in revenue to a nearly $1T valuation

There is something that has fundamentally changed (or broken, depending on your perspective) with the valuation of American tech companies. They've always traded at a premium, but the pandemic and the encroachment of the monopolists has turned the earth sour.

ghtbircshotbe• 1 month ago

I don't know if that's completely true. Google, Apple, Amazon, Nvidia etc are somewhat expensive, but not ridiculously so based on earnings and growth. Tesla, spacex and openai are in a different universe, though I honestly can't say wtf is going on with them

riffraff• 1 month ago

You see, in this _new economy_ you can't rely on old metrics to judge value.

At least that's what I remember from the 00s.

danielmarkbruce20• 1 month ago

It's easy actually. If it grows a lot, with decent margins. Grow 30B at 40% pa for 10 years and you arrive at around $850B in revenue, assume 25% operating margins, that's slightly over 200B of operating income, and it all makes a lot of sense.

You can debate the assumptions, but it isn't witchcraft. The math is simple.

anshumankmr• 1 month ago

I think what PEOPLE are saying IT is very difficult to sustain that level of growth.

niemandhier2• 1 month ago

I think the reasoning should be the other way around:

If you limit yourself to simple math, than you get this result.

Assuming linear growth into a market with competition and an unclear ability to absorb that growth is a gamble.

somenameforme6• 1 month ago

The market is pricing in the potential for future revolutionary shifts which seem fairly likely. For instance if there ends up being substantial labor disruption due to LLMs then the economy as we know it is going to end up being reshaped in ways that are difficult to imagine beyond the fact that the LLM providers would likely play a critical role in it.

Similarly, SpaceX has already brought the cost of getting things to space down by a couple of orders of magnitude, and Starship is rapidly progressing with the potential to bring them down a couple more. The aspirational goals there are being able to get things to space on the order of $10-$20/kg. That would dramatically reshape not only space but even transport as we know it, very likely in a way analogous to how the ability to quickly send a 0 or 1 signal long distances for cheap reshaped the world in ways that would be essentially impossible to predict prior to its happening.

I'm bearish on the LLM revolution and bullish on the space one, which generally seems to also be the market consensus.

freakynit3• 1 month ago

"""For instance if there ends up being substantial labor disruption due to LLMs" ""

.. who are they gonna sell to if people don't even have money to buy? We live in circular economy... everyone's dependent on someone or the other... you take one leg out of this, and the whole thing stops. UBI won't work either because it will lead to runaway inflation and extreme levels of invasive control over people's lives and what they can and cannot do.

I hope no one here is naive enough to believe that AI would actually be used for general welfare of people.

JMiao• 1 month ago

i am not ready for our weyland-yutani overlords

skybrian3• 1 month ago

Why should we believe that Starship launch costs will be that cheap when we don't believe Musk's other numbers? Where does that number come from? Has anyone looked into it?

It doesn't cover launch costs directly, but here's a bearish take on reusability of the second stage:

https://mceglowski.substack.com/p/how-should-we-think-about-...

gspetr• 1 month ago

$20/kg is a wild claim.

A typical American semi-truck (18-wheeler) can carry between 40,000 and 45,000 pounds (20 to 22.5 tons) can travel only 160k miles (2/3 distance to the Moon) on a budget of $400k (i.e. $20/kg).

Do you expect us to believe that rocket transportation would be in the ballpark of truck prices in the near future?

himata41134• 1 month ago

so they could stop development and research right now and be profitable, considering that gpt 5.5 is often regarded as one of the best models for writing code this is looking pretty good.

Let's take another example: If OpenAI grows to 10 times their current size and continue spending the same amount on research and development they would be profitable today without any other changes to their organizational structure.

This is shaping up to be a relatively good investment compared to a lot of other companies that have IPO'd in the ~2010 era, the only reason why it looks bad because the numbers are just insane.

XorNot• 1 month ago

If they stop R&D right now they'd have to fire most of their staff to realize the savings and sell off their datacenter capacity.

They would show a profit for 1 year and then become completely irrelevant.

spongebobstoes5• 1 month ago

they aren't suggesting it as an actual strategy, merely an indicator that the fundamentals seem realistic

hagbarth• 1 month ago

Yes, but I don’t see either of those scenarios giving them the growth needed to justify a trillion dollar valuation. Especially with the current competition (a competitor releases a much better model, and they have to respond or see their revenue drop).

So I don’t see a company in immediate danger of collapsing, but I also don’t see a great investment at that valuation.

slow_typist2• 1 month ago

The moment they‘d stop development would put marketing and sales in a very dire position, regardless of how good gpt 5.5 is.

himata41134• 1 month ago

Anthropic claimed themselves that AI progress will slow down effectively calling fable the pinicle of what we can do today which is true, they've trained the largest possible model with the most advanced system from nvidia. GPT 5.5 would likely last a year or two because I don't see chinese labs investing that many billions in compute since at the end of the day it's a compute x intelligence graph and the only way to catch up is to quite litereally spend more money, that's realistically where the moat is. Of course distilling techniques have been proved to be very powerful, but I am still not convinced they're able to replicate the nuanced behavior these models exhibit. GLM 5.2 will be interesting to see as it is the most promising model that might blow up the entire argument of spending billions in training.

That said this is obviously not a strategy, but rather an observation that this is not a flawed, impossible concept.

backend_dev823• 1 month ago

I heard from Ed Zitron that you can't really turn off "training" on these models even after they have been released because they need continuous re-training to keep up with the changes in the world and the language etc. Is this correct? if it is, can we even say that research can be turned off entirely?

spongebobstoes5• 1 month ago

it's completely false

willsmith723• 1 month ago

but why is that a feasible hypothetical?

Just 10x your revenue without increasing R&D cost? where's this 1 magic trick and why can't every company just use it?

himata41134• 1 month ago

R&D cost is static, converting all subscription customers to api customers would yield 10x boost in revenue immediately so the demand is there, of course we will probably see demand expand more than that the question is if it's 10x (break even) or 20x (justifying trillion dollar evaluation.

bonsai_spool• 1 month ago

How does this compare to SpaceX? I’m very much not an accountant, hard to know what numbers to compare directly

jbird99• 1 month ago

In a surprise to no one.

simonw7• 1 month ago

"OpenAI generated $13.07 billion in revenue in 2025"

Considering just four years ago they were a research lab with hardly any revenue at all, and no corporate muscles for earning revenue, I think that is a very impressive number.

(Sure, they're losing a whole lot of money too. Same goes for almost every other hyper-growth company in the history of tech.)

Retric3• 1 month ago

That argument supports any levels of losses, however I also think it’s rather misleading.

Growth means some inefficiencies, but their expenses are largely around commodities like electricity and data centers not a sudden army of salespeople. They also got 150M 11 years ago and 1 billion 7 year ago, they where quite large in 2022.

Basically you don’t get better at writing checks to your local utility which limits how much they can control costs.

simonw7• 1 month ago

They also got 150M 11 years ago and 1 billion 7 year ago, they where quite large in 2022.

I had to look that up, you're talking about investment there, not earned revenue.

The 150M was their initial funding (actually 130M I think https://www.clay.com/dossier/openai-funding)

The 1B was from Microsoft in 2019: https://openai.com/index/microsoft-invests-in-and-partners-w...

In 2022 they only had 335 employees (according to various internet searches but I can't find an original source for that number.) I can't find credible numbers for revenue from the GPT-3 API, which did have some usage - GitHub Copilot started charging a subscription fee on June 21, 2022 - https://github.blog/changelog/2022-06-21-github-copilot-is-n... - and that was running on the OpenAI Codex model so presumably OpenAI had some revenue from that.

truncate• 1 month ago

Sure, they're losing a whole lot of money too. Same goes for almost every other hyper-growth company in the history of tech

That doesn't mean anything. There are examples to make both ways. E.g. WeWork

fragmede• 1 month ago

and WeWork is awesome example because it fell apart before IPO. It didn't even make it that far. On the other hand, for all of the shit talking that goes on online, SpaceX is up 49% from IPO price.

All of the shit that people said about SpaceX is still true. It's still up 49%. I'm sure it'll take a dump the next time anything bad happens, like a rocket explodes, but now that it's public, I'ma be watching all their rocket launches so I can buy if that happens and sell right after. I'm also going to be watching because going to space is fucking awesome but I can't buy a trip on that rocket yet and and no one's gonna pay me to watch it.

echelon2• 1 month ago

Yeah, but they have no moat.

They gave up on video because three separate Chinese companies were kicking their ass (and for cheaper).

Google has a better image model in the majority of cases. Much faster, too.

Claude Opus and Fable are like a billion times better. It's not even funny. Codex can't do Rust at all.

What does that leave them? Ads in ChatGPT? I've started to just rely on Google search blended with Gemini answers now because it's faster and doesn't spit out a 20-page essay of useless effusive prose.

Open source models will eat them from the bottom.

Will those enterprise contracts be renewed in a market full of alternatives?

There's nothing sticky about this company.

They're making a necklace with Jony Ive though, I guess?

chrisco2552• 1 month ago

They still have the most recognized AI brand name and they are still the most popular LLM. For most users, a 10% diff between Claude and GPT isnt going to move the needle plus it seems to be a horse race anyways. I think their user base is stickier than you would think. Still, it isn't as sticky as social media and it is cheaper to switch AIs than email accounts.

zozbot2343• 1 month ago

Opus 4.8 is quite weak. And GPT-Pro is very much available unlike Fable, it's just not hooked up to the Codex harness yet.

Razengan2• 1 month ago

Google has a better image model in the majority of cases.

Not always. A couple months ago (before ChatGPT Images 2) I tried various prompts on both Google's Nano Banana or whatever and ChatGPT.

"Capybara riding a tricycle. It has 7 tentacles instead of legs"

Google got the number of tentacles completely wrong: https://i.postimg.cc/nzY30y7X/Capybara-Gemini-Nano.png

and after some additions like spotted fur and multicolored tentacles, it was no contest:

ChatGPT: https://i.postimg.cc/02c2LrxV/Capybara-Chat-GPT-before-Image... (although there's still kinda 1 extra tentacle)

And Google still seems to have that odd choice of a European plaza/square/cobblestone street background for everything.

Claude Opus and Fable are like a billion times better.

NOT at ALL: https://i.imgur.com/jYawPDY.png

Subscribed to Claude Opus for 2 months, with a few months gap between subscriptions to try different versions.

The UX/UI around Anthropic's products was excruciatingly annoying, right from the payment process, and Claude's AI was often hilariously dumb and "trying too hard", constantly full of "oops, you're right" backtracking and often borderline dangerous.

I tried Claude and ChatGPT Codex side by side on some tasks, with the same prompts. Each time, my confidence in Claude fell.

I've been subscribed to the $20 ChatGPT plan for more than 1 year, and this month, I am trying the $100 plan for 1 month.

ChatGPT Codex has been actually helpful and made me more productive enough that I can't imagine going back to coding without it.

raincole2• 1 month ago

Same goes for almost every other hyper-growth company in the history of tech

Except it's not true. No one lost $38.5B in a year just to 'hyper-grow' or whatever it means. Uber accumulated ~$30B loss over a decade.

Edit: I read it wrong. The loss was mostly caused by one-time event[0]:

Before OpenAI’s switch late last year to become a public benefit corporation, investors in the company received convertible interest rights rather than conventional equity. Under US accounting rules, those interests were treated as liabilities and periodically revalued as the company’s valuation increased.

It looks like that OpenAI is actually quite in line with other companies that lost money to grow.

[0] https://www.ft.com/content/e15b0d7e-ff6b-4f16-ba7a-4068feddb...

Retric3• 1 month ago

Depreciating assets is one of several possibilities.

bxk76• 1 month ago

Or a utility :)

Look at how a utlity works, in setting price specifically, for things that are considered a public good. The story is not about how much profit or revenue they make. Its about how do you keep it afloat and expanding in the coming year. Thats it.

bandrami• 1 month ago

Compute is both rivalrous and excludable so it can't be a public good in an economic sense

freakynit3• 1 month ago

If your losses scale with your growth, while at the same time your competitors are eating into your future user-base, how are you ever gonna become profitable? Only two ways comes to my mind: regulatory capture, and moving upwards into full software-development house.

dofm7• 1 month ago

$867 million of that was Softbank. News the market has not taken well.

bambax2• 1 month ago

AI doesn't work like the rest of the tech industry. The cost of selling another license for a software program is approximately zero.

In the case of AI the marginal cost of the next token is not zero, and is in fact probably not going down much with volume, if at all.

So I'm not sure one can argue that scale will solve everything. It's very much like the old adage "we lose money on every sale, but make it up in volume".

No you don't.

hackcasual• 1 month ago

It's wild to think how efficient Internet services were prior to AI. The most expensive thing would probably have been something like encoding video. Now you've a substantial portion of a rack dedicated to a user in the case of something like fable

pqtyw• 1 month ago

But there is no indication they are losing money on tokens when R&D and other expenses are factored out? The margins on API are likely very high so the higher the volume the more likely they will be able to cover the other mostly fixed costs.

jacobgold• 1 month ago

Annual revenue of $13 billion per year puts them on par with Apple's AirPods revenue, which places them in U.S. Fortune 500.

ltononro2• 1 month ago

lol so weird to put that into perspective macbook ~8b airpods ~18b iphones ~60b

I know they are massive, but AI seems something much more important than airpods

hcheffer3• 1 month ago

And a JPEG was just a JPEG in 2020, but in 2021 they became a 17 billion dollar speculative market.

How "very impressive" is your NFT collection these days?

simonw7• 1 month ago

NFTs were very obviously stupid. LLMs aren't.

bitmasher9• 1 month ago

It’s a big number. I wonder what steps we will see to raise revenue leading up to an IPO, and specifically if they’ll cut off the OpenAI subscription that is powering my Open claw install. They have been quite friendly with using the oauth tokens in various harnesses.

exfalso• 1 month ago

They will most certainly cut subscription access, same as Anthropic. It is inevitable that they will go down the same lockin+squeeze route. I unsubscribed from Claude a couple of weeks ago, on gpt now. However, Openai will have to make a similar move.

At that point however open weight model providers will start to shine. All eyes on China.

maxnevermind3• 1 month ago

The reported 2025 figures include $7.5 billion in cost of revenue, $19.18 billion in research and development, $5.73 billion in sales and marketing, and $1.57 billion in general and administrative expense

Does training of new models go into RnD or cost? And subscription plans' subsidies, are those cost or sales and marketing?

qsera• 1 month ago

Your comment made we wonder what happens when the AI company's new model does not have a dramatic improvement and have just knowledge updates, and majority of the users does not upgrade?

Given the enormous cost of training, would it be worth training new models then?

maxnevermind3• 1 month ago

Given the enormous cost of training, would it be worth training new models then?

I'm not an expert, but is this even an option? I mean models must be refreshed with latest knowldge base periodically even without algo/design improvements, otherwise the lag become too noticeable and it will hurt users and their use-case.

lrae• 1 month ago

Does training of new models go into RnD

Pretty likely R&D, but obviously would need to be confirmed by OpenAI.

The original reporting includes this:

The documents revealed how much OpenAI paid Microsoft for services. In the 2025 calendar year, OpenAI paid Microsoft $10.59 billion for “Research and development” expenses. We believe this most likely refers to the cost of training OpenAI’s models.

https://www.wheresyoured.at/exclusive-openai-financials/

Der_Einzige• 1 month ago

Daily reminder that API pricing for both OpenAI and Anthropic is profitable today and that the cost of tokens for existing models falls sharply over time for a variety of reasons (unless we go into a far worse hardware inflationary environment than we are in today).

The only thing any of them are losing money on is the 200$ a month plans, and you betchya that they're moving as many enterprises to per token pricing as possible rapidly.

If you're not investing in these companies when they IPO and ideally before that if you are lucky enough to be rich, you deserve to not reap what you didn't sow.

otabdeveloper4• 1 month ago

API pricing sucks. You're gonna want to move to self-hosted LLMs if you're forced to pay API prices.

grebc3• 1 month ago

Audited figures would say otherwise.

N_Lens• 1 month ago

Ed Zitron was right all along?!

barrkel• 1 month ago

That revenue exceeds cost of revenue so tokens aren't being subsidized...

sho• 1 month ago

Ed Zitron certainly was right that a constant firehose of denialist AI doom would get him clicks and views from the type of audience who yearns to have their biases confirmed and their fears validated. He's made a lot of hay off that excellent prediction.

Can't really think of anything else he's been right about, though. I don't think "right" is what he's going for anyway, it's all about that validation and a coherent, testable hypothesis takes a very distant second place.

JSR_FDED3• 1 month ago

Why would revenue continue to grow at this rate?

Enterprises are becoming increasingly aware that the best models can be used for planning and then cheaper models for execution - all the way to local models for some tasks.

Add in increasing competition from Chinese models… I’m not convinced this revenue growth is guaranteed.

danielmarkbruce20• 1 month ago

global gdp is over 100 trillion. Something like 50-60% is paid to labor. If you assume AI takes a good chunk of labor, the market is gigantic. Really really really gigantic.

margalabargala• 1 month ago

Most labor by any measurement is not knowledge work like software engineering.

bayarearefugee2• 1 month ago

If you assume AI takes a good chunk of labor, the market is gigantic. Really really really gigantic.

But without labor the entire economy also collapses into a singularity beyond which nothing really makes sense anymore, so there's that.

dofm7• 1 month ago

AI bots don’t buy consumer goods and other services.

If people don’t get work they stop buying things. If people don’t buy things, companies don’t make money. If companies don’t make money they won’t buy — or have a reason to buy —- AI companies’ services.

You cannot eliminate a significant chunk of labour cost without causing demand collapse. People saying that there is money in eliminating labour costs at that scale are not doing the whole of the calculation.

JSR_FDED3• 1 month ago

That’s a good way of looking at it, I appreciate the different perspective.

From your headline number you’d have to deduct non-knowledge work though.

You’d also have to take into account the fact that while AI can often replace some tasks, it’s often not enough to replace the entire worker.

For the high end knowledge worker jobs the corresponding token costs could be higher than the cost of wages.

Given the demand you describe, would it even make a difference whether you invested in OpenAI or Anthropic?

spongebobstoes5• 1 month ago

because they have more research and better models coming

building a Rube Goldberg machine on Chinese models might work okay, but it will be brittle, and is unlikely to work as well as the latest and greatest model from OpenAI

the demand for intelligence is nearly limitless

niemandhier2• 1 month ago

Did you read the code dump Anthropic involuntary gifted us?

JSR_FDED3• 1 month ago

Why would it be a Rube Goldberg machine? You talk to the Chinese models through the exact same API as OpenAI. They do tool calling in the same way. They deliver 90% of the leading benchmarks at less than one tenth the cost.

There’s also no reason to think they’ll always be lagging the US. At some point the scarcity of GPUs will be resolved, or they’ll brute-force the problem using less capable chips but leveraging their much lower energy costs to make this viable.

ted_dunning2• 1 month ago

Add in the fact that they claim 900 million weekly uniques. Pretending the growth and cost rates compound as described in the article, they will need to generate about 100x current revenue to growth out of their current hole. That sort of implies that they will have 10x the entire world's population as weekly uniques at that time.

That seems unlikely.

necovek2• 1 month ago

They could have 2x customers spend 50x as much money too.

I think it's more about contrasting it with world economy as a whole for a reality check.

pu_pe• 1 month ago

It's not like their 10x revenue growth year-to-year was based on expanding their customer base 10x though. The vast majority of weekly users are not paying, so they are actually a cost right now, but could be converted into paying users or audience for ads in the future.

ZaoLahma• 1 month ago

all the way to local models for some tasks.

I think this is the key takeaway for the future of AI. Give tech a few years to catch up and we will likely have the functionally equivalent to today's models running on consumer grade hardware. From there it will explode, where "it" is how we use and interact with computers. AI will be integrated into just about every workflow.

The business case in this future would be to sell the trained models to end users. The investment would be shifted towards the training of models and delivering updates, with revenue coming from model licenses, upgrades and cloud services for tasks that exceed the local capabilities.

zuzululu3• 1 month ago

I'm super happy for them and Anthropic

They are leading the way

tptacek• 1 month ago

Financial Times:

A person familiar with the matter said the large majority of that jump reflected a non-cash accounting charge linked to the company’s previous structure rather than its underlying operations.
Before OpenAI’s switch late last year to become a public benefit corporation, investors in the company received convertible interest rights rather than conventional equity. Under US accounting rules, those interests were treated as liabilities and periodically revalued as the company’s valuation increased.
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.

https://archive.is/wIzZV#selection-1887.0-1890.0

zuzululu3• 1 month ago

numbers look better than I thought. i think openai is going to make it

ThrustVectoring2• 1 month ago

As to why those are required to be treated as liabilities, the primary point of accounting rules is to ensure the accurate valuation of the business to potential purchasers. Someone who would buy the business before those interests converted would see their ownership get diluted, thus it reduces the value of the business to a prospective buyer, thus an accounting of their books must list it as a liability.

It's not an issue if you're tracking the cash flow of the business or it's overall viability regardless of ownership structure. These book losses are just recognizing that the business has a higher market value so their ownership dilution commitments reduce the present value of the company more.

HlessClaudesman3• 1 month ago

These numbers show that OpenAI is boned. They have no path to profitability and if they raise prices or cut services they will strangle their golden goose.

They could have existed indefinitely as a service layer that was reliant on other companies feeling charitable, like Firefox, but they also wanted to get rich.

zuzululu3• 1 month ago

it shows that OpenAI found market fit and Anthropic may have done a better job.

not sure where this constant dooming comes from

rsalus• 1 month ago

they are forecasting $25-30B this year, so if anything they look to be neutral or even profitable.

danielmarkbruce20• 1 month ago

No, they show they just need to keep growing. Not a crazy assumption.

HlessClaudesman3• 1 month ago

They cannot grow indefinitely when they make a loss on every user. More growth = bigger losses.

Current investors should be left holding this shit bag, better them than retirement funds.

ChrisArchitect• 1 month ago

[dupe] Discussion: https://news.ycombinator.com/item?id=48550465

supertroop• 1 month ago

Musk hiding is Ai inside spacex seems strategic now. Ai forward companies can’t hide losses, but a conglomerate can hide that. Might give grokursor new life.

mdavid626• 1 month ago

Feels like fraud to me. Everything depends on exponential growth. “Trust me, bro”

cmiles82• 1 month ago

OpenAI likely missed the window to have a successful IPO.

A year ago, even 6 months ago, folks would have been still hypnotized by the hype and they would have pulled it off. Today too many people see a burning ship of cash and no moat to justify the burn. The story just isn’t there anymore.

DoesntMatter22• 1 month ago

Musk best move IMO was going public before anyone else and gobbling up those 85 billion. I'm sure anthropic will do the same, leaving OpenAI maybe holding the bag. We'll see.

rvz2• 1 month ago

Correct. We will have to see about the first quarterly report from them first.

bayarearefugee2• 1 month ago

OpenAI likely missed the window to have a successful IPO.

I wish I could believe this but lighting giant stacks of cash on fire is, unfortunately, no longer a disqualifying event for tulip buyers.

I wouldn't bet they will have a successful IPO, but I also wouldn't bet they won't, it will be almost entirely vibes based at time of launch.

grey-area2• 1 month ago

SpaceX IPO shows that the mania is alive and well.

The big AI IPOs this year will mark the high point in the bubble IMO, with retail FOMO ensuring that they pop like SpaceX has.

After that I expect them to crater, just like all those Spacs and Blockchain startups.

ai_slop_hater• 1 month ago

What do you mean spacex has? Did spacex stock go down?

raincole2• 1 month ago

After reading Financial Times and Ed Zitron's articles[0][1], I've reached the opposite conclusion. OpenAI's situation healthier than what the outsiders once believed:

Revenue: $13.07 billion
Cost of Revenue: $7.5 billion

In other words generating tokens is actually a profitable business even for the frontier models. It's best to IPO when it's the case.

[0] https://www.ft.com/content/e15b0d7e-ff6b-4f16-ba7a-4068feddb... [1]: https://www.wheresyoured.at/exclusive-openai-financials/

cmiles82• 1 month ago

The problem with that calculation though is that you’re ignoring the deprecation cost of developing the models which is where much/most of the cost actually lies.

Your math is saying an apartment building is profitable because rent exceeds utilities and other direct expense but ignores the mortgage. Real estate run with that math goes bankrupt quite quickly and this is essentially the same problem Open AI has.

4k0hz• 1 month ago

To be fair, a lot of that revenue is from subscriptions that aren't necessarily fully utilized. OpenAI said in March [0] that they have 50 million subscribers. Assuming they're all on the $8/month plan, that's $4.8 billion a year, likely at a pretty low COR.

[0] https://openai.com/index/accelerating-the-next-phase-ai/

etempleton• 1 month ago

Assuming that constant R&D is not a requirement to compete. At what point can any of these companies stop improving their models? The answer is when they have a monopoly position. And we’re nowhere near that happening.

arjie• 1 month ago

Of which $30b is a non-recurring loss due to the way they do stock grants. That seems incredible. The company is going to moon on IPO.

mfru• 1 month ago

it will be so satisfying to see them crash and burn

ltononro2• 1 month ago

The headline is a little bit misleading and sensationalist imo Most of the loss comes from the non-profit->for-profit switch This is not operational loss, one-time stuff to make the company for-profit and compete with Anthropic in apples-to-apples comparison, am I right?

Leaked OpenAI financials show $38.5B loss and compute burn

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