If you take this at face-value, they probably aren't profitable (to the tune of a $5 billion loss). I don't like idle speculation, but having actually read this their analysis seems pretty sound. Their numbers on training costs and hosting actually came from an anonymous insider. Impossible to say how reliable this anonymous insider is, but planting false, exaggerated numbers to outwit competitors seems a bit too much like a hare-brained scheme, hence why I opt to go with the numbers. If anything, companies tend to downplay costs when lying.
The one thing that caught me as a little bit crazy was spending $1.5 billion on employees. They have ~1500 employees, so that's $1 million per head. That seems insane, but then again, AI researchers are a valuable commodity these days.
Even if the cost of employees was $0, you'd still be looking at estimated losses in the billions.
> Nobody can buy them without bankrupting themselves many times over, unless the big companies buy them (very unlikely)
There are lots of M&A structures. A company can in fact buy another that is bigger than itself. Plus Microsoft will easily be able to afford a $100B acquisition with some creative financing, or maybe even outright cash.
Sometimes I think some companies are playing a different game. Where profit was never really a concern. The goal is just to keep showing growth and raising. You just have to cash out before the music stops or The Singularity happens.
One aspect of The Singularity is the rapid acceleration into an unpredictable point of no return. Maybe the financial model mirrors this?
Wait - they're 'profitable, excluding all of their employee costs'? Does that just mean they're charging more than the cost of their electricity to generate the tokens?
Presumably this would mean also earning more than the amortized cost of all the hardware they’ve purchased too which is a much higher bar than just electricity costs.
Nobody can buy them without bankrupting themselves many times over, unless the big companies buy them (very unlikely)
Or is OpenAI just going to keep raising and raising more and more?
Is OpenAI even profitable?