Given how quickly the evolution of AI has upended technology across the globe and is affecting various markets, it's nigh impossible to accurately predict where anything might be headed. There's no shortage of predictions, ranging from utopia to ultimate doom for established industries. An NYT columnist, however, has one specific bet: OpenAI will be destitute in 18 months in the wake of its AI endeavors.
According to an external report last year, OpenAI was projected to burn through $8 billion in 2025, rising to $40 billion in 2028. Given that the company reportedly predicts profitability by 2030, it's not hard to do the math.
Altman's venture projects spending $1.4 trillion on datacenters. As Sebastian Mallaby, an economist at the Council on Foreign Relations, notes, even if OpenAI rethinks those limerence-influenced promises and "pays for others with its overvalued shares", there's still a financial chasm to cross. Mallaby isn't the only one thinking along these lines, as Bain & Company reported last year that, even with the best outlook, there's at least a $800 billion black hole in the industry.
The financial guru contextualizes the situation adeptly, broadly stating that it's not a matter of whether end-user AI will become technologically entrenched, but rather whether the economics of developing it will make sense in the mid- to long-term.
The analyst points out that in theory, investors would "bridge the gap between the emergence of a great technology and eventual profits", except that many AI companies seem to be burning cash far faster than they can generate income. Mallaby remarks that the newcomers are in a much worse position than "legacy" companies like Microsoft or Meta, given that the old-timers already had money-making businesses before AI came about and can (literally) afford to wait out the necessary period until the clankers deliver the fruits.
According to him, the majority of people are using free services and have no qualms switching to a competitor once their usual bot adds ads or usage limits, a fact corroborated by the myriad options available right now for all sorts of tasks.
He sees this as a temporary problem for AI providers, though, as agentic AI becomes more entrenched in daily people's lives, it'll become harder to switch, as the bots should eventually have all your shopping preferences, aspirations, and emotional profile mapped out —perhaps even better than yourself.
Mallaby does praise OpenAI's CEO Sam Altman's dollar-attracting gravitational field that raised $40 billion in investment, an amount bigger than any other private funding round in history — even more than Saudi Aramco's $30 billion. The difference is that Aramco, along with other IPO'd enterprises, had a business model and profitability, neither of which OpenAI currently enjoys.
The AI financial ouroboros certainly looks poised to eat its own tail, but there's an argument that the ophidian will only lose its newer part. There would be some irony in the AI market losing one or more of the players that started it all.