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OpenAI to generate over $1 bn in revenue this year, dispels fear of going bankrupt

A few days ago, reports surfaced online that OpenAI, the makers of ChatGPT, may declare bankruptcy as early as the end of 2024.

However, now it seems that OpenAI will generate some decent revenue after all and may not go bankrupt soon.

Backed by Microsoft, who invested over $10 billion in the company, OpenAI had projected only to make over $200 million this year. Last year, the company generated only $28 million in its operations.

Changing tides
As per a report by The Insider, Sam Altman’s OpenAI is currently set to generate over $80 million in just a month and will continue to do so at least throughout the year.

The change in OpenAI’s fortune stems from the fact that it has broadened its approach and is now selling specialized licenses of its GPT-4 LLM and other AI software products. Most notably, it sells many plug-ins and API access to companies who want to create AI chatbots based on OpenAI’s GPT-4 LLM.

Core challenges remain the same.
Although OpenAI is generating a healthy revenue, its core challenge remains unchanged. It is still burning a lot of cash to keep the public version of ChatGPT, its website, running. Reports have suggested that OpenAI burns about 700,000 dollars daily to keep the public-facing chatbot running daily.

Moreover, it has tremendous costs for other, more intensive AI generators, like Dall-E2 and some other AI solutions.

The problem of scaling an AI business
Scaling any business is a tremendously tricky proposition to be faced with. For Sam Altman and OpenAI, the task is even more challenging. The more users ChatGPT has, the more computational power it will need, which means investing in more data centers, supercomputers, and GPUs.

ChatGPT also faces severe challenges from Meta and Google and their AI solutions. Google and Meta have released solutions that work faster than ChatGPT and are more accurate. Both Meta and Google are also offering their AI services coupled with many benefits that already have a ton of paid enterprise users.

Then there is the issue of drifting. ChatGPT is miserably bad at maths and is only getting worse, especially in complex mathematics, as per Stanford and other universities studies. Large language models like GPT-4 tend to get worse in certain areas when developers try to improve one specific site. No one knows why this happens, nor can anyone predict which areas an LLM will deteriorate.

The cost of all of this adds up pretty quickly. While OpenAI may be generating solid revenue now, it is undoubtedly far from sustainable profitability.

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