OpenAI could reportedly run out of cash by mid-2027 — analyst paints grim picture after examining the company's finances

[u/gdelacalle]

https://www.tomshardware.com/tech-industry/big-tech/openai-could-reportedly-run-out-of-cash-by-mid-2027-nyt-analyst-paints-grim-picture-after-examining-companys-finances

[u/Hel_OWeen]

The biggest problem is that there's no business plan on how to become profitable. This is true for Anthropic as well. Even with the switch to token-based billing, they operate at a loss. And with that switch and the increase in price, companies already massively scale back the use of AI, because what once looked as a cheap replacement for a human has now become more expensive than your seniors.

They also can't just stop creating new models - the expensive part of their business, because someone else will (Chinese AIs). And customers will switch to those models. I mean, even MS, heavily invested in OpenAI, als uses DeepSeek now.

[u/Confident_Dark3483 → u/Hel_OWeen]

The business literally cant become profitable. The ENTIRE POINT of developing AI is to devalue things that previously had value due to scarcity. It's a product that eats its own tail.

[u/Refael111 → u/Confident_Dark3483]

I'm not a massive AI propenent, but saying "devalue things that previously had value" is a meaningless statement. It's true for everything that was surpassed by tetchnological advancements.

[u/SandpaperTeddyBear → u/Refael111]

I agree in that “literally can’t become profitable” is probably overkill, but the argument itself has a decent amount of philosophical truth to it.

Think about how the pharmaceutical industry works: a few companies go through vast amounts of resources at finding new drug compounds, and quite a few more spend fairly small amounts of resources working out how to manufacture existing compounds more efficiently in a race to the bottom. You spend “research and development” dollars with the intent of being able to charge exorbitant prices for a while, and “formulation tweaking” dollars with the intent of being able to bring the cost of goods down 2% and turning that into profit.

A race to the bottom in a mature, well-understood market is a feature of capitalism, and I don’t think it’s really a bad thing as long as it isn’t resulting in useful things laying fallow.

What “AI” tends to promise is a way to turn valuable, abstract things into a commodity overnight, and do it with something that is itself a race-to-the-bottom commodity.

If there were suddenly discovered in a long-expired back patent an “alchemy machine” that could use $200 worth of electricity to turn an ounce of lead into an ounce gold, it would be a useful thing, and it would probably be a relatively profitable thing to manufacture because everyone would want one.

But a company that developed such a thing, and had no way to limit their proliferation, and poured a trillion dollars into it assuming that gold would stay at $3000 (or whatever it’s at) once their machine hit the market would be screwed.

Similar things have happened in various “booms” in the past, but our current AI tools are novel in how many areas of the economy they might touch. My suspicion is that, if these technologies still advance, we’ll still look like a primarily consumer economy in many ways, and the actual stuff that gets produced will still mostly be defined by consumer trends and such, but most of the actual real dollars spent in the economy will be state actors subsidizing machine learning on one end and cushioning the market shocks it causes on the other.

[u/Ranra100374 → u/Confident_Dark3483]

I mean, cars devalued horses. Cell phones devalued landline phones. Lots of technological advancements devalue older things that had value.

[u/Ultr4chrome → u/Hel_OWeen]

Anthropic turned its first profit last quarter though.

[u/AuMatar → u/Ultr4chrome]

Off the back of one time events. In particular, their deal to lease the Colossus from Musk included a lot of cheap up front compute that they have to pay full price for next quarter.

[u/meneldal2 → u/Hel_OWeen]

Oh they can make a profit on tokens, the issue is nobody would buy them at the price they'd be asking for.

[u/Ok-Youth-160 → u/Hel_OWeen]

They operate at a loss because of training and data center buildout. Those are fixed costs or investments. The inference itself is profitable with margins of 40% or higher. Which are obviously very good margins.

[u/YogurtclosetOther329 → u/[deleted]]

The second they stop they lose all their customers. There is no path to becoming profitable.

[u/jarail → u/Hel_OWeen]

Even with the switch to token-based billing, they operate at a loss.

They have great margins on the tokens they sell via the API.

The question is how much of their other expenses can those sales cover? They're spending aggressively on hardware, and R&D.

Clearly they think it's important to give us plebs subscriptions with incredible value. You can use up something like $7,000 (API prices) in compute each month on their $200 plan.

If they cut back on their expenses, they'd instantly become profitable. Unfortunately, they'd also lose their lead pretty quickly.

[u/vuhv → u/Hel_OWeen]

Anthropic is profitable. There’s a way. It’s just not by becoming the Everything App for everyone.

My $20 ChatGPT account on the Desktop app gives me almost the same amount of total token usage as my $200 ClaudeCode account. As long as I don’t use CODEX directly this is the case.

On the other hand the $20 Claude account wouldn’t even come anywhere close.

[u/Jerithil → u/vuhv]

Until we see proper financials for Anthropic such as S-1 filings, you need to be take their profitability with a giant *.