According to the news on November 1, according to the analysis of androidheadlines, "artificial intelligence" and "AI" have been hot words in the technology industry for some time. OpenAI is the initiator of this great revolution, and with its ChatGPT platform, it has become the first name that comes to mind when people talk about artificial intelligence. But what if all is not as it seems? What if OpenAI is actually far from profitable and is just "burning cash" waiting for something that may never happen (financial sustainability)? The company's current financial situation seems to bear this out.
ChatGPT has undoubtedly captured the imagination of the world. Sam Altman, CEO of OpenAI, has become a representative figure in the future of artificial intelligence, leading mankind towards an unprecedented era of productivity and creativity. Large enterprises have also invested heavily in OpenAI, and the company has even changed its business model to seek more convenient revenue sources. Even so, all this accumulated income may still not be enough.
OpenAI is in the midst of a catastrophic financial freefall, according to a recent financial analysis by Earth & Universe's Will Lockett. The transformative company was losing money at a rate that would shock most established companies. Worse, its solution to this cash-burning fire appears to be to put out trillions of dollars' worth of gasoline.
OpenAI $1 Trillion Investment: The Math of the Money Black Hole
Let’s demystify finances. OpenAI reportedly generated $4.3 billion in revenue in the first half of 2025. That's an impressive number for a young company. The question is? During the same period, the company suffered a net loss of US$13.5 billion.
This is not just a rounding error. This means that for every dollar OpenAI makes, it loses three.
That would see the company lose as much as $27 billion a year by 2025. For reference, that's nearly double the $14 billion in losses some previous reports had forecast for 2026. The way its growth is calculated is even more worrying. OpenAI spends a staggering $7.77 for every $1 of additional revenue.
Lockett describes the situation bluntly: "It's a bottomless pit. I can't put into words how scary this is." In any normal business, such numbers would trigger emergency brakes, mass layoffs, and desperate transformations to survive. But OpenAI is not a normal company. Lockett added that it was as if OpenAI's leadership was "fully aware that they were hurtling into a wall at 100 miles an hour, but instead of hitting the brakes, they hit the accelerator."
Double down on wrong assumptions
OpenAI did not transform, but doubled down on investment. The company announced plans to invest approximately $1.4 trillion annually in data centers and artificial intelligence infrastructure by 2030. OpenAI has reached cooperation agreements with giants such as TSMC, Samsung and Intel.
The investment is betting on the idea that “the more, the merrier”—building bigger and more powerful models is the path to profitability and, ultimately, artificial general intelligence (AGI). But if current operating costs are unsustainable, future costs will be prohibitively high.
Calculations based on industry standards (the annual operating costs of a data center account for 26% of its construction cost), the outlook is bleak. This trillion-dollar infrastructure plan could cost OpenAI approximately $650 billion in annual operating costs by 2029.
What is the company's optimistic revenue target for the year? Just $125 billion.
This account simply doesn't make sense. “Even if OpenAI hits its 2029 revenue target of $125 billion,” Lockett noted, “it will still be losing $500 billion annually.”
This profligate behavior is reckless enough in itself. And when you learn what OpenAI's own researchers have admitted, it seems extremely irrational.
The enemy within: OpenAI versus itself
The harshest criticism of OpenAI's strategy comes from OpenAI itself. All large language models (including ChatGPT) face a core technical problem, which is "illusion". “Illusion” refers to AI’s tendency to confidently fabricate facts, sources, and answers. It is this flaw that makes them incompetent for the high-risk commercial and enterprise-level tasks that OpenAI relies on to support its valuation.
The company is making a trillion-dollar bet on the premise that the problem can be solved by scaling up, adding more data and computing power.
But there's a problem. According to a research paper published by OpenAI, this assumption is wrong. Their own research reportedly found that "hallucinations are a core component of generative AI techniques and cannot be solved with more data and computation."
The researchers did find a potential workaround called "active learning," which essentially requires a lot of human supervision to correct the AI's mistakes. But Lockett reports that they concluded that "running such models is inherently very costly...it would almost always be much cheaper to have humans do the task."
The company is spending trillions of dollars betting on a solution to a problem that its own scientists have proven insoluble, a problem they admit is inherent to the technology.
Reality check: 95% failure rate
This technological shortcoming is not just theoretical, it is playing out in the real world. Despite the media's hype that artificial intelligence will take over the world, the reality is that artificial intelligence has generally failed.
An MIT study found that 95% of AI pilot projects failed to generate any profit or productivity gains for the companies implementing them. Other studies, such as a report from METR, even suggest that AI coding tools can actually slow down developers because they need to spend a lot of time finding and correcting AI "beneficial" bugs.
This is a reality check against the hype. While some niche AI tools for data analysis do work, the generative AI revolution championed by OpenAI is far from successful. Even user engagement — the lifeblood of any tech platform — is in trouble. There are even reports that ChatGPT usage has peaked and is currently declining.
If not for profit, then for what?
If the technology is fundamentally flawed and the financials are in terrible shape, why continue to pour billions into a failed strategy?
Critics believe the answer lies in incentives. "They're not developing artificial intelligence," Will Lockett said. "They're just trying to increase profits at all costs."
Interestingly, in Silicon Valley, the valuation of artificial intelligence companies is not based on core factors such as profitability or product-market fit, but on data center investment. More investment means greater ambition, which attracts more investment and higher valuations.
This creates a distorted incentive structure for executives. CEOs like Sam Altman don't receive a traditional salary; their wealth is tied to their company's stock valuation. Altman reportedly holds a 7% stake in OpenAI and stands to gain $10 billion if the company transforms into a for-profit company. This incentive structure encouraged executives to keep pushing the company to enrich themselves before the bubble burst. Bankers and venture capitalists who previously supported the “artificial intelligence boom” are now quietly warning that the bubble is about to burst.
The future of OpenAI and the artificial intelligence bubble
So, is OpenAI’s goal of becoming profitable within the next few years realistic?
Data shows this is nearly impossible. The company's revenue growth has fallen sharply, plummeting from 250% in 2024 to 56% in 2025. To break even, OpenAI needs to triple its revenue every year until 2030. Meanwhile, its core product failed in 95% of commercial pilot projects.
This set the stage for a brutal reckoning. The $6 billion investor bailout OpenAI accepted at the end of 2024 only delayed the inevitable. Without a swift and thorough restructuring, the company's trajectory points toward bankruptcy.
But it's not just about one company. OpenAI controls 61% of the U.S. generative AI market and attracts more than 20% of AI venture capital investment. So basically, the risk across the industry is highly concentrated in one company.
When this bubble bursts, it won't end quietly. It has the potential to bring down the entire artificial intelligence industry, and could even wipe out a significant portion of the $192.7 billion in venture capital investment in the field.
This is the core paradox of OpenAI. The company was built on the promise of building superhuman intelligence, but it operates with what appears to be a severe lack of common sense. This is a story of "greed reigns at all costs" and is hurtling toward an ending that will affect us all. Let's wait and see how things develop.
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