OpenAI faces the challenge of an still fragile business model

Twelve zero figures circulate around OpenAI. Hundreds of billions are talked about like the weather. But these figures are not profits. They are bets. Future commitments. Debts maybe. Behind the glitter of artificial intelligence, a question emerges: Can OpenAI still keep the financial pace it has imposed on itself? Or is it running toward a data wall, pockets empty?

The Cloud Ogre or the Devourer of Billions

OpenAI has established significant partnerships with major cloud providers, entering into contracts worth $250 billion with Microsoft and $38 billion with Amazon, totaling $288 billion for 36 gigawatts of computing power. However, it is anticipated that barely a third of this capacity will be actively used by 2030, with the remainder still requiring payment. Financial analyses suggest that the cumulative bill could reach $792 billion by 2030, potentially escalating to $1.4 trillion by 2033 if current spending patterns persist.

Given the closely intertwined relationships between AI LLM companies, cloud, and semiconductor companies, we believe there is an argument for some flexibility, at least on the part of the largest players… less capacity will always be better than a liquidity crisis.

Sam Altman's vision of a sovereign AI has led to a deep reliance on cloud infrastructure. The long-term nature of these agreements means that each payment cycle presents a considerable challenge in avoiding logistical bankruptcy.

Credit Growth: OpenAI’s Big Stretch

OpenAI has set an ambitious target of acquiring 3 billion users by 2030, with an aim for approximately 10% of them to be paying subscribers. This translates to 220 million paying users for ChatGPT, a significant leap from the current 35 million. Achieving this would position OpenAI as one of the world's largest subscription services, rivaling platforms like Spotify and approaching Netflix's user base.

Despite projections of a $282 billion free cash flow, potential asset sales, and an estimated $17.5 billion in treasury funds by 2025, the company faces a substantial financial shortfall. HSBC estimates that OpenAI will require an additional $207 billion in funding by 2030, even with concerted efforts to diversify revenue streams and enhance direct monetization strategies.

The perception of OpenAI as a highly profitable unicorn generating significant revenue from every query contrasts sharply with its financial realities. Analysts describe the company as a "cash sink" rather than a profit machine. Even under optimistic scenarios, it is acknowledged that OpenAI will likely continue to subsidize the majority of its users for many years.

Without substantial new fundraising or an unexpected surge in growth, OpenAI risks continuing to heavily subsidize its services, with raised capital potentially flowing directly to cloud providers. The aspiration of providing "AI for all" could devolve into an unsustainable budget expenditure, sustained more by investor confidence than by tangible revenues.

OpenAI and the Myth of 220 Million AI Subscribers

The core strategy for monetization revolves around subscriptions for artificial intelligence services. The premium plans, such as Plus ($20/month) and Pro ($200/month), are seen as key revenue drivers. However, the conversion rate, currently at 5%, with an expected increase to 8.5% by 2030, presents a considerable gap to bridge. Other potential revenue streams include targeted advertising, assisted shopping features, and commission-based interfaces.

The competitive landscape is intensifying, with companies like Anthropic and xAI rapidly gaining traction. OpenAI's current dominant AI market share is projected to decrease, potentially falling from 71% to 56% in the consumer sector and from 50% to 37% in the enterprise sector.

While AI usage is experiencing explosive growth, this expansion does not automatically translate into increased revenues. The free user base is expanding at a faster rate than the paying subscriber base. The "AI for All" initiative aligns with the freemium model, where a larger user base necessitates higher spending on computing resources without immediate financial returns.

By 2026, OpenAI aims for an Initial Public Offering (IPO) with a valuation of $1 trillion. This IPO is envisioned as a critical step to refinance its global ambitions and solidify artificial intelligence as the foundational technology of the 21st century. However, the question remains whether this fundraising effort will be sufficient to cover the immense financial commitments already made, particularly in a global environment where rapid expansion sometimes outpaces sustainable financial planning.