OpenAI Faces Financial Scrutiny as Investors Grow Wary Despite Massive Funding

New York. OpenAI, which currently dominates the world of Artificial Intelligence (AI), has reached a very difficult juncture. Despite raising over $168 billion in investment, this company, which has become a favorite among global investors, is causing major technology companies to become skeptical due to its failure to establish a profitable business model. 

Although Nvidia CEO Jensen Huang recently announced an additional $30 billion investment in OpenAI, he signaled that this might be the final investment. His statement that no more money can be poured into the company until it issues an Initial Public Offering (IPO) has created a new wave in the market.

Nvidia has also backed away from the previously discussed $100 billion infrastructure investment. The $30 billion investment Nvidia is currently making is not small either. This amount is nearly one-eighth of Nvidia's annual revenue and equivalent to 50 percent of its last quarter's revenue. 

Although Nvidia's latest financial report showed good revenue, its stock price has declined due to heavy investments in loss-making companies like OpenAI. Investors are confused about how to accurately value AI companies.

According to Alexander Tomic, Associate Dean at Boston College, the future of the AI sector resembles the internet of the 1990s, where there are many possibilities but a clear path to making money has yet to be found. OpenAI faces the challenge of needing to generate $200 billion in annual revenue by 2030 to justify its current valuation, which is 15 times higher than its current figures. On the other hand, its operating costs have skyrocketed. According to HSBC projections, OpenAI's responsibility for managing computing power could reach $1.4 trillion by 2033.

Microsoft is in a similar situation. Microsoft's share price has also seen a significant drop after its expenses increased by 66 percent, as it provides services to OpenAI through its cloud platform Azure. OpenAI is surrounded by increasing debt on one side and serious legal issues concerning copyright and others on the other. 

Some experts have even warned that OpenAI only has enough cash reserves for the next 18 months and the company could face a financial crisis afterward. The need for billions of dollars in investment to reach a stage of high revenue, coupled with the growing burden of debt, has made OpenAI's future risky.