ChatGPT Users Swell – But So Did OpenAI’s 2022 Losses

While ChatGPT became the fastest app to surpass 100 million users, its parent company OpenAI’s 2022 losses also doubled to $540 million.

The Information reported that OpenAI generated revenues of $28 million last year but expects them to rise to $100 million this year.

The company’s CEO Sam Altman believes that the company would need to raise $100 billion as it strives to achieve “artificial general intelligence” – which means an AI model intellectually better than humans and with the ability to improve itself.

Late last month, OpenAI raised $300 million in a funding round that valued the company between $27 billion-$29 billion.

The company has also secured a multi-year financing deal from Microsoft with an estimated value of $10 billion.

During their earnings call for the March quarter, Microsoft CFO Amy Hood said that the company has a “great partnership” with OpenAI and stressed, “When we grow, it helps them; and when they grow, it helps us.”

Responding to how revenues from OpenAI flow to Microsoft, she said, that said that it would be apt to “think about them as a customer of ours, like any other customer who would use the Azure infrastructure and our Azure AI services in service of supporting their end customers.”

Hood added, “And so when they do that, like any other customer who has a commercial relationship with us, we recognize revenue on that behalf.”

With a YTD gain of 27.5%, Microsoft stock is outperforming the Nasdaq this year – at least partially because of its partnership with OpenAI.

• Read our guide on buying Microsoft stock

Meanwhile, other tech companies especially Google are also investing in generative AI to take on ChatGPT.

OpenAI Losses Doubled in 2022

As for OpenAI’s 2022 losses, it’s not uncommon for startups to lose money especially when they are in the hyper-growth phase as ChatGPT is.

The company attracted 100 million users in just about two months which is a record and beats all other previous records hands down.

Meanwhile, the Information reported that Steve Dowling, OpenAI’s communications and policy chief would soon depart the company.

Notably, AI professionals are in great demand as multiple companies are hiring for the vertical.

• Read our guide on the best AI stocks

Tesla’s CEO Elon Musk is also reportedly building a team of AI executives as he plans to launch his own company TruthGPT.

While Musk was among the co-founders of OpenAI he has since turned into a critic – and among others, he believes that the company is now effectively controlled by Microsoft.

AI Regulations Are a Burning Issue Amid ChatGPT’s Growth

Musk is also lobbying for AI regulations and the issue is getting traction in the White House now. Yesterday, CEOs of Alphabet and Microsoft met President Joe Biden where they discussed the risks associated with AI.

Other countries are also wary of generative AI and are contemplating regulating the industry. Italy became the first Western country to ban ChatGPT but reversed the ban within in weeks after OpenAI met the regulatory conditions.

Yesterday, UK’s CMA (Competition and Markets Authority) also launched an initial review of AI models.

AI regulations are a burning issue for leading economies and last week digital ministers of G7 nations agreed to adopt a “risk-based” regulation while preserving an open and enabling environment.

As for ChatGPT, the company’s parent is attracting good interest from investors despite the ongoing funding winter.

While the company might not turn profitable in a hurry the deep pockets of its backers especially Microsoft would ensure the recurring supply of funds.

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