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OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

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Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#81

Post by nstart »

Refreeze5224 wrote: post #14
nstart wrote: post #12

I'm a little confused here. Cost of revenue is lower than revenue. That's good. R&D is the main contributor to losses here and this seems normal in an industry like this. For OpenAI specifically, I think this is problematic. They were the first movers but despite the large R&D they've lost so much ground to Anthropic despite Anthropic seemingly gifting them with weird PR self owns. But if we were to extrapolate this…

How in the world could you read that article and think there is anything positive about OpenAI's prospects? We've been hearing for months that these companies need to make trillions of dollars in a handful of years, growing at record rates in order to break even and justify their massive outlay. It's not going to happen.

I tend not to focus on that future too much. I used to do so long ago. For example, how could Facebook possibly justify their losses while asking for such a big valuation? Same for Uber. Same for any number of big companies. And it turns out that growth in the future is impossible to predict accurately. Shopify is a good example where at the time the addressable market of online stores was tiny. But it turned out that Shopify created its own market which is huge today. Technology improvements have a way of creating new markets which far surpass today's total addressable market. Factor in currency depreciation and whatnot and sometimes, futures that looked impossible turn out to be possible.

Not saying anyone is wrong in pointing at the buildouts for AI and questioning its feasibility. Just making the argument for why I personally only look at operational costs and revenue because it's the only real-ish value I can look at and judge if a business can grow sustainably.

As a counter point, the red flag to all of this is R&D costs growing for each model release. If that continues and revenue cannot outstrip it, then these companies have a problem and it'll probably be that just 1-2 frontier labs can survive this once the dust settles.

Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#82

Post by curio_Pol_curio »

JumpCrisscross wrote: post #74
Schiendelman wrote: post #32

Earlier quoted context omitted.

You're adding absolute dollars rather than using percentages - that usually isn't how that works.

> rather than using percentages Not really. Fractions (7/2), ratios (3.5x) and percentages (+250%) are fundamentally mathematically identical. There are a lot of problems with this back-of-the-envelope estimate, but I’m not sure the one I understand you presenting is one of them.

? https://www.theinformation.com/articles/openai-burned-3-7-bi... ?

https://www.theinformation.com/briefings/index-startup-ornn-...

Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#83

Post by Schiendelman »

JumpCrisscross wrote: post #74
Schiendelman wrote: post #32

Earlier quoted context omitted.

You're adding absolute dollars rather than using percentages - that usually isn't how that works.

> rather than using percentages Not really. Fractions (7/2), ratios (3.5x) and percentages (+250%) are fundamentally mathematically identical. There are a lot of problems with this back-of-the-envelope estimate, but I’m not sure the one I understand you presenting is one of them.

Any of those three would be fine. They did not use any of them. They simply used absolute dollars.

Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#84

Post by [deleted] »

dgellow wrote: post #72
saberience wrote: post #31

Earlier quoted context omitted.

Yeah he has zero credentials and authority and an agenda to push. Not to mention most of his articles are financially and technically illiterate and full of mistakes and inaccuracies. No idea why his shit keeps getting submitted.

Genuine question, do you have examples of inaccuracies and mistakes? If you ignore his caustic tone and predictions what I’ve seen reported by Ed Zitron has been accurate.

[deleted]

Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#85

Post by raincole »

nstart wrote: post #12

I'm a little confused here. Cost of revenue is lower than revenue. That's good. R&D is the main contributor to losses here and this seems normal in an industry like this. For OpenAI specifically, I think this is problematic. They were the first movers but despite the large R&D they've lost so much ground to Anthropic despite Anthropic seemingly gifting them with weird PR self owns. But if we were to extrapolate this…

> Revenue: $13.07 billion

> Cost of Revenue: $7.5 billion

It's almost too good to be true. Did OpenAI intentionally leak this? It singlehanded eliminate the biggest concern: that tokens are sold at loss.

Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#86

Post by dofm »

raincole wrote: post #85
nstart wrote: post #12

I'm a little confused here. Cost of revenue is lower than revenue. That's good. R&D is the main contributor to losses here and this seems normal in an industry like this. For OpenAI specifically, I think this is problematic. They were the first movers but despite the large R&D they've lost so much ground to Anthropic despite Anthropic seemingly gifting them with weird PR self owns. But if we were to extrapolate this…

> Revenue: $13.07 billion > Cost of Revenue: $7.5 billion It's almost too good to be true. Did OpenAI intentionally leak this? It singlehanded eliminate the biggest concern: that tokens are sold at loss.

I think it does look like an intentional leak, but I disagree that it even shows with any clarity that inference is profitable.

Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#87

Post by dofm »

efficax wrote: post #53
Traster wrote: post #45

To be honest I almost think the numbers are irrelevant. In 2024/25 there was a lot going on - will AI replace authors, film makers etc. Will it replace social media (anyone remember Sora?). A tonne of that stuff didn't work out. At the tail end of 2025 a real product market fit emerged. Coding agents. They work. They do a job that you can actually profit from. So everything else is kind of academic. Of course they we…

coding agents aren't enough to justify the amount of capital invested

My key realisation from playing with open weights models on my own laptop is that at least where text is concerned, the vast majority of what an average non-programmer consumer thinks AI does, my laptop can now do with the wifi disabled. And arguably where speech and audio is concerned, too.

There is, put simply, a huge, huge information gap about the uniqueness of these commercial services.

There's an open question about how open weights models will be funded when they can't be used in a war between these companies, but the reality is that the amount Apple is paying Google for the right to distill Gemini, for example, is strongly indicative of the total size of the consumer market. Because pretty soon everyone's phones will be doing what local models can do.

Global markets will ultimately learn that coding agents are, at a first approximation, the only source of revenue for this stuff over the medium term at least, and the value proposition for consumer AI in the long term (beyond being a feature of a phone) hasn't yet been invented, and any that might exist depend on micropayments architectures that don't exist.

Re: OpenAI Losses Increased Nearly 8X in 2025, with Spending Hitting $34B

#89

Post by mamonster »

thewebguyd wrote: post #77
lelanthran wrote: post #29

Earlier quoted context omitted.

> Revenue went from $3.7B to $13.07B — roughly 3.5x. > Operating loss went from ~$8.8B to ~$20.9B — roughly 2.4x. > Doesn't seem like a domesday scenario. Those two lines are moving up and to the right, but are not parallel. It all depends on where those two lines meet (the break-even point): too far in the future and the company will be dead anyway. Almost all companies will eventually be profitable; the problem is…

Compounding revenue & operating loss at those same rates (3.5x and 2.4x respectfully) puts those two lines meeting at around 2031. That'd be about 9-10 years to profitability, that seems pretty normal. Amazon took 9 years, Uber took 14 years before its first profitable year.

>Amazon took 9 years, Uber took 14 years before its first profitable year

Both had a path to profitability in an environment of falling interest rates. OpenAI is going public in an environment of higher for longer interest rates. The discounting math is nowhere near as attractive for investors.

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