OpenAI recently increased its annualized revenue by 20 percent to $1.6 billion, up from $1.3 billion in mid-October.
The growth is due to the strong performance of ChatGPT and the sale of subscriptions, reports The Information. The annualized rate equates to a monthly revenue of approximately $130 million (previous month’s revenue * 12).
In addition to subscriptions, OpenAI offers an API to its AI models that power ChatGPT. The multiplier here is Microsoft in the Azure cloud, which offers the same models. Especially in Europe, Microsoft is OpenAI’s preferred API partner for privacy reasons.
However, Microsoft is also a competitor: it is the only company allowed to resell OpenAI technology, but it retains a significant portion of the revenue from these resales.
OpenAI’s margins are better on direct sales. However, Microsoft is said to currently own 49 percent of OpenAI, so the connection is very close anyway.
OpenAI remains alone at the top
OpenAI remains the clear dominant company in the AI space. Anthropic is a distant second. The startup, which spun off from OpenAI in 2021, reportedly expects to generate more than $850 million in annual revenue by the end of 2024.
By comparison, some OpenAI executives expect their company to reach $5 billion or more in annual revenue by the end of 2024, The Information reports, citing insiders.
Anthropic is said to be targeting a valuation of $15-18 billion for its next round of funding, while OpenAI is targeting a valuation of $100 billion.
It is unclear if and how the 4.5-day dismissal and reinstatement of OpenAI CEO Sam Altman has affected OpenAI’s sales growth. Rival Anthropic reportedly received more than 100 inquiries from OpenAI customers over the weekend of Altman’s dismissal.
2024 is a crucial year for AI
Looking ahead to 2024, the two startups and the AI industry as a whole face significant challenges. On the one hand, expectations for AI models and their capabilities have skyrocketed this year, not least due to the buzz generated by OpenAI itself.
On the other hand, landmark court cases are pending over data use and potential copyright infringement. If these are lost, it is likely to have a significant impact on the profitability of companies and the further development of the technology.