When does OpenAI go bankrupt?

Artificial Intelligence is All About the Hype

OpenAI, founded nearly a decade ago, is coming up on its 10^th birthday. The company has been at the undisputed epicenter of a technological and cultural storm surrounding the prevalence of so-called artificial intelligence. There has been an explosion in hype, investments, startups, and online pessimism towards the technology and the future it will bring.

Amid the revolutionary marketing, there is a persistent nagging question, particularly among those concerned about the economics: where will the profits come from? Despite claims of changing the world, so far actual AI products have proven to be massive money-losing flops.

Apple Intelligence? More like Actual Incompetence. Grok? No thanks, "Mecha-Hitler". ChatGPT? Would have been great for cheating on my homework.

OpenAI and others have been burning through incredible, almost unfathomable sums of cash. And for what? All these products suck. And they certainly do not make money.

While the hype is undeniable, the financial reality tells a different story.

OpenAI Company Financials

What is publicly known about OpenAI's finances is simply staggering. The company is successfully generating billions of dollars in revenue - nobody can deny that - but it is also generating an even larger burn rate. Much larger. This is driven by the escalating costs of training the models at the core of OpenAI's products. For the first half of 2025, reports indicate OpenAI generated about $4.3 billion in revenue, yet it managed to burn through so much cash that it ended with a $2.5 billion net loss. The target for the full year 2025 is reportedly $13 billion in revenue, but that comes with a projected net loss of a staggering $8.5 billion. Clearly, the cost of doing business in the AI model building world massively exceeds the revenue being generated.

How does a company lose billions of dollars and still make promises about hundred-billion-dollar data center projects? By leveraging unmitigated hype and converting it into investment capital. OpenAI has secured ridiculous amounts of funding, including tens of billions of dollars from Microsoft and other major investors. After raising a $40 billion Series F round in 2025, on top of $6.6 billion in late 2024, the company was reported to hold about $17.5 billion in cash and securities at the end of the first half of 2025. These investments are bolstered by OpenAI's sky-high valuation of $500 billion as of October 2025, per secondary sales of shares.

While OpenAI has an absurd burn rate, the company also possesses a large cash reserve and the unique ability to raise additional capital seemingly out of thin air. Some long-term forecasts suggest the company expects to burn through over $100 billion by 2029, with profitability not expected until 2030. The runway in front of OpenAI is constantly being extended by new investments, which makes the chance of imminent bankruptcy very low, but the entire business model currently depends on the ability to continue raising more capital.

Beyond financial concerns, OpenAI also faces significant strategic risks.

OpenAI's Potential Pitfalls

OpenAI faces numerous challenges as the company attempts to pioneer this new technology, any one of which could spell disaster. Here are some of the most notable potential pitfalls.

• The entire financial model behind OpenAI relies on capital markets remaining willing to back the company at ever-increasing valuations. If investor sentiment sours on the company or the technology itself, its cash reserves could vanish.
• OpenAI is not the only player in the race to artificial intelligence. Companies such as Google, DeepSeek, Meta, and Anthropic are racing to catch up. If any one of them achieves similar or better results with a more sustainable cost structure, OpenAI's ultra-high burn-rate could become a serious liability.
• The company is spending enormous amounts of money on compute power and R&D. If this spending fails to produce proprietary models that are commercially superior to the alternatives, they will not be able to justify the costs, and investors will eventually stop paying the bills.

Show Me the Money

This chart shows OpenAI's losses growing even as its revenue increases.

Worst Case Scenario for OpenAI

What happens if the music stops and all future funding dries up? No more investment capital, no more bank loans, no more strategic commitments. OpenAI would be left with its current cash on hand, estimated to be around $17.5 billion. With a burn rate of approximately $9 billion per year, basic math suggests OpenAI has about 2 years of runway remaining before going bankrupt.

This calculation is of course simplified and based on unrealistic assumptions.

• This scenario assumes zero revenue growth. OpenAI is actively, perhaps even desperately, looking for new and larger sources of revenue that could one day lead to profitability.
• This assumes OpenAI does not rein in their expenses. The company could focus on optimizing how models are built and consumed, reducing the overall need for infrastructure and its associated (and very large) costs.
• There is an assumption that all the cash on hand is liquid. In reality, much of the investment in OpenAI comes through specific strategic partnerships. These funds may not be as liquid as cash in the bank, or could be earmarked for specific purposes, unavailable for general operating expenses.
• Some of the company's funding is in the form of traditional debt. This debt must be serviced over time with interest, which could actually accelerate cash depletion, shortening the available runway.