OpenAI's Meteoric Rise: $1 Billion In Annual Revenue On The Horizon

OpenAI's generative artificial intelligence (AI) platform ChatGPT crossed more than 100 million monthly active users two months after launching to become the fastest-growing consumer application in history.

ChatGPT was quickly dethroned by Meta Platform Inc.'s Twitterlike platform Threads, which had 100 million users three days after its launch. But Threads lost approximately 50% of its new users within 10 days as the hype regarding Twitter's copycat platform declined, making ChatGPT one of the most significant platforms to launch this year. 

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Explosive Growth Prospects 

OpenAI is generating approximately $80 million per month, according to reports. At this rate, the company is poised to generate over $1 billion in annual revenue, surpassing previous expectations that it would achieve that mark by 2024. 

The company prompted the recent mainstream frenzy of AI startups. AI has become the #1 funding sector for startups, and continues to grow going into the end of 2023. Retail investors

OpenAI's ChatGPT subscription model is one of the biggest drivers boosting its revenue growth. Before rolling out its premium ChatGPT Plus model, which costs $20 per month, the platform was generating $28 million in annual revenue. In addition to deriving income from ChatGPT, OpenAI also generates revenue by offering application programming interface (API) access to its AI models.

Most people expected ChatGPT to roll out a subscription-based model soon after its launch when OpenAI CEO Sam Altman tweeted last December, "We will have to monetize it somehow at some point; the compute costs are eye-watering." 

ChatGPT's ability to simulate human conversation while performing tasks such as writing poetry, offering restaurant recommendations and simplifying complicated subjects propelled it to fame. But for certain users, the tool appeared erratic.

"Since ChatGPT's launch just nine months ago, we've seen teams adopt it in over 80% of Fortune 500 companies," OpenAI stated in a press release.

ChatGPT's triumph, which prompted substantial investments in artificial intelligence from major technology companies and other sectors, is expected to lead OpenAI to profitability. The company spent nearly $540 million to develop the platform because of the high cost of developing machine learning models and hiring top executives from Google. 

OpenAI introduced a business-oriented version of ChatGPT last month, unveiling the ChatGPT Enterprise model with upgraded security and privacy features. The company disclosed in a recent blog post that notable organizations such as Canva, Estée Lauder Cos. Inc. and PwC are among its initial users.

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Skyrocketing Valuation 

OpenAI has the potential to transform the generative AI industry. As the startup scales its operations, venture capital firms are pouring funds into the company. Renowned venture capitalists such as Sequoia Capital, Thrive Capital, K2 Global and Andreessen Horowitz have invested more than $300 million in OpenAI, placing the startup's valuation in the $27 billion to $29 billion range. The unicorn also has a long-standing partnership with tech giant Microsoft Corp., one of OpenAI's initial investors. 

OpenAI and Microsoft jointly announced the third phase of their "multiyear, multibillion-dollar" partnership to commercialize AI supercomputing and launch new AI-powered digital experiences across consumer and enterprise products. 

"We formed our partnership with OpenAI around a shared ambition to responsibly advance cutting-edge AI research and democratize AI as a new technology platform," Microsoft Chairman and CEO Satya Nadella said. "In this next phase of our partnership, developers and organizations across industries will have access to the best AI infrastructure, models and toolchain with Azure to build and run their applications."

It might take a while for the company to enjoy the full benefits of its achievements. Microsoft is entitled to 75% of OpenAI's profits until it recoups its $13 billion investment in the startup, according to an agreement the companies reached earlier this year. Altman also previously stated that OpenAI's pursuit of artificial general intelligence will require an additional expenditure of around $100 billion.

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