OpenAI isn\u2019t just burning through cash. It\u2019s lighting an entire mountain of money on fire.<\/p>\n
But since it\u2019s not a publicly traded company, the extent of that mountain remains difficult to gauge. But clues periodically emerge: as the Financial Times reports<\/a>, for instance, the company recently signed a staggering $250 billion rental agreement with Microsoft \u2014 as well as a $38 billion contract with Amazon, less than a week later.<\/p>\n According to HSBC, whose software and services team issued an update to its financial model of OpenAI, the company will be spending a nauseating $620 billion per year on renting data center capacity to power its AI models alone. That\u2019s despite only a third of the total contracted amount of 36 gigawatts actually scheduled to come online before 2030.<\/p>\n It\u2019s a precarious moment, with lenders expecting a blockbuster growth in revenue \u2014 an enormous ask that will require OpenAI to accomplish things unprecedented in business history.<\/p>\n Meanwhile, experts are warning of an AI bubble<\/a> that has grown so much that it\u2019s proping up the entire US economy<\/a>. If it were to pop, the consequences could be disastrous, with the discussion shifting towards whether firms can even survive the next couple of years as spending on data centers continues to rise precipitously.<\/p>\n And that\u2019s not the only looming challenge. OpenAI also has to contend with increased competition as well<\/a>, with Google\u2019s Gemini 3 throwing down the gauntlet earlier this month. That\u2019s more naysaying from HSBC, by the way, which expects OpenAI\u2019s consumer market share to drop substantially by the end of the decade.<\/p>\n Whether OpenAI will be able to pay its bills in the upcoming years remains hazy at best. According to HSBC, the company will need to reach three billion ChatGPT users by 2030, a steep goal considering userbase growth is already plateauing<\/a>. According to CEO Sam Altman, the company has around 800 million weekly active users<\/a>.<\/p>\n As\u00a0the\u00a0FT\u00a0reported<\/a>\u00a0last month, paying ChatGPT subscribers represent roughly 70 percent of the outfit\u2019s annual recurring revenue \u2014 yet only a pitiful five percent of users are currently willing to pay for a subscription.<\/p>\n New revenues will also have to be poured into further data center build-outs to support new users, as the FT explains, in a vicious cycle that could heavily eat into OpenAI\u2019s margins.<\/p>\n If things were to go south, HSBC suggests that OpenAI will end up changing its data center commitments.<\/p>\n \u201cLess capacity would always be better than a liquidity crisis,\u201d the broker wrote.<\/p>\n While HSBC remained bullish about the prospect of enormous \u201cproductivity-driven\u201d economic growth that could \u201cdwarf what is often seen as unreasonable [capital expenditure] spending at present,\u201d OpenAI still has to pull it off.<\/p>\n And investors are already asking some tough questions over AI companies\u2019 sky-high valuations and meager revenues, with AI chipmaker Nvidia\u2019s shares falling for several weeks now<\/a> \u2014 despite posting better-than-expected quarterly earnings<\/a>.<\/p>\n And Nvidia is the one selling shovels<\/a> during the ongoing AI gold rush. OpenAI has a much steeper hill to climb, since it has to create a profitable service while paying for all those shovels.<\/p>\n In a telling moment earlier this month, Altman became irate<\/a> after being asked by podcaster and OpenAI investor Brad Gerstner how a company \u201cwith $13 billion in revenues\u201d can \u201cmake $1.4 trillion of spend commitments.\u201d<\/p>\n \u201cIf you want to sell your shares, I\u2019ll find you a buyer,\u201d Altman shot back. \u201cEnough.\u201d<\/p>\n