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OpenAI is ringing alarm bells.
Thanks to its hit AI chatbot ChatGPT, the company's once healthy lead over its competitors has now become so dominant that OpenAI CEO Sam Altman has declared a “Code Red.”
The financial stakes are almost comical in their magnitude. The company is igniting billions of dollars with no end in sight. It has committed to spending well over $1 trillion over the next few years, while also losing an astonishing amount of money every quarter.
And with the majority of ChatGPT users balking at the idea of paying for a subscription, revenue has lagged significantly.
Meanwhile, Google has made significant progress, rapidly catching up to OpenAI's 800 million or so weekly active ChatGPT users as of September. To make matters worse, Google is in a much better position to turn generative AI into a viable business, even with a whopping $30 billion in its pockets. profit Every quarter, washington post points out.
The question on many investors' minds is: Will OpenAI survive if the AI bubble bursts?
“We're going to see a situation where ChatGPT is an early winner,” said Ross Hendricks, an equity analyst at Porter & Company. Wapo. “They won't be able to truly monetize, they won't be able to break out from the pack, and they'll end up like MySpace.”
In a note Thursday, Deutsche Bank analyst Jim Reid estimated that OpenAI's staggering losses could reach $140 billion between 2024 and 2029.
“OpenAI has the potential to continue to raise significant amounts of funding and ultimately develop products that generate significant profits and revolutionize the world,” he wrote. Wapo. “But at this point in history, no start-up company in history has operated with the expectation of losses of this magnitude.”
“We are moving firmly into uncharted territory,” Reid added.
Just to cover the interest on all the funds OpenAI borrows, the company's revenue would have to increase significantly. However, according to recent sensor tower data, WapoChatGPT's monthly active users increased by just 5% from July to November. Google's Gemini AI app rose a much healthier 30% over the same period.
Recent data also suggests that ChatGPT user growth has stalled in Europe, highlighting a slowdown that couldn't come at a worse time for OpenAI.
Google's latest Gemini 3, in particular, shocked when it was announced last month with benchmarks that outperformed OpenAI's most powerful AI models. While the company's Nano Banana Pro AI image model also pushed the envelope, OpenAI's Sora video generation app has received relatively little media attention after a storm of controversy surrounding its rollout.
It's not just Google. OpenAI also faces stiff competition from Chinese open source AI models like DeepSeek, a startup whose highly energy-efficient R1 model disrupted Silicon Valley earlier this year.
So, by many indications, OpenAI appears to be in deep water, with analysts increasingly alarmed that the company is burning through astronomical funding at an unprecedented pace.
Even the so-called “godfather of AI” and former Google AI leader Jeffrey Hinton is not optimistic about OpenAI's future.
“I think it's more surprising than anything that it took Google this long to overtake OpenAI,” he said. business insider this week.
“I think they're starting to outrun that now,” he added. “Google has a lot of very good researchers, and of course it has a lot of data and data centers.”
“My guess is that Google will win,” Hinton concluded.
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