penAI just keeps spinning more plates.
The AI firm on Tuesday announced a multiyear partnership with Intuit, the financial firm behind TurboTax, QuickBooks, Credit Karma and Mailchimp, to give the company access to OpenAI’s APIs and expose ChatGPT users to Intuit products. The deal will generate more than $100 million for OpenAI over an unspecified period.
These kinds of enterprise deals highlight OpenAI’s horizontal approach to the AI market: The company seeks to have its hands in everything, from browsers to consumer apps to enterprise workflows to finance. But in doing so, it’s spending a lot of cash.
- The company has committed to shelling out more than $1 trillion on developing AI infrastructure over the next eight years through a series of deals with the likes of Oracle, SoftBank, Nvidia, Amazon and more.
- These deals may already be dragging down OpenAI’s partners. According to the Financial Times, Oracle might already be underwater following its $300 billion deal with the AI firm.
- And the costs of running the models they already have is getting steeper, too: according to data reported last week by tech blogger Ed Zitron, OpenAI’s inference costs from the first through third quarter hit $8.67 billion, with revenues of $4.33 billion during that period (though Altman has claimed revenues are “well above” $13 billion and expected annualized revenue run rate of $20 billion by the end of the year.)
Mixed reports aside, OpenAI has committed itself to spending far more than it’s earning, tying its fate to other tech giants in the process, in lofty hopes of developing large swathes of AI infrastructure. The costs may overwhelm them before these projects can even be completed, Scott Bickley, advisory fellow at Info-Tech Research Group, told The Deep View.
With fears of an AI bubble reaching a fever pitch, valuations and expectations of AI may face a harsh course correction, Bickley said, leading to data center buildouts being “vastly curtailed.” Even before constraints like supply chain and energy constraints come to the fore, “I think just the cost to serve will overwhelm that economic model before anything else,” he said.
Rather than trying to be everything to everyone (and spending billions in the process), OpenAI might be better off focusing on where it’s deriving the most value, such as enterprise deals. (Clearly, it’s working for rival Anthropic.)