Victoria Bazir
⬤ New balance sheet estimates from HSBC, published by the Financial Times, reveal a financial reality that's often overlooked in the AI hype cycle. While OpenAI's revenue is forecast to skyrocket through the rest of this decade, cloud computing expenses are climbing just as fast. The bottom line? Free cash flow stays firmly in the red across all forecast years, meaning the company continues burning through cash despite massive revenue gains.
⬤ The projections show OpenAI's revenue climbing steadily from 2025, eventually crossing the $200 billion mark by 2030. But here's the catch: cloud compute costs scale right alongside that growth, and in absolute terms, they're growing even faster. Every single year through 2030 shows negative free cash flow, which means OpenAI keeps losing money operationally even as revenue explodes. The estimates also indicate multiple rounds of fresh equity funding, showing the company still needs outside investors to keep the lights on.
⬤ This financial picture highlights just how different AI companies are from traditional tech businesses. In most software companies, growing revenue leads to better profit margins over time. Not here. For OpenAI, every dollar of new revenue brings nearly a dollar of new infrastructure costs, especially for the massive computing power needed to train and run AI models. The data suggests that building cutting-edge AI isn't about hitting profitability quickly—it's about having enough capital to fund years of heavy spending while chasing technological breakthroughs and market position.
⬤ Why does this matter? Because it changes how we should think about OpenAI's success. Huge revenue numbers don't automatically mean financial strength when your costs are racing alongside them. This forecast makes it clear that winning in advanced AI might have less to do with turning a profit and more to do with who can afford to lose money the longest. As the AI industry continues evolving, access to deep pockets and patience with sustained losses could be what separates the leaders from everyone else.
Victoria Bazir
