How high are OpenAI's compute costs? Possibly a lot higher than we thought
10 days ago
- #AI economics
- #Microsoft
- #OpenAI
- OpenAI's compute costs may be significantly higher than previously thought, with inference spend alone reaching close to $5bn in the first half of 2025.
- Microsoft and OpenAI have a complex revenue-sharing agreement, with Microsoft reportedly receiving 20% of OpenAI's revenue and OpenAI getting a 20% cut of certain Azure and Bing revenues.
- Despite reported revenues of $4.3bn, OpenAI's cash burn was $2.5bn over the same period, indicating a large gap between revenues and running costs.
- If the data is accurate, OpenAI's business model and that of other general-purpose LLM vendors could be unsustainable without significant cost reductions or price increases.
- Projections based on the data suggest OpenAI's revenue might not cover inference costs until around 2033, and net of Microsoft's share, possibly never.