Record loss: OpenAI could lose more than $12 billion in third quarter - WSJ

Microsoft recorded a $4.1 billion loss write-down in the third quarter related to its investment in OpenAI. This amount was up 490% year-on-year. Bernstein analyst Firoz Valligi estimates that this means that OpenAI's net loss for the quarter could have exceeded $12 billion, as Microsoft's stake in OpenAI was 32.5%, The Wall Street Journal reported.

Microsoft accounts for its stake in OpenAI using the equity method, recognizing only its portion of the AI company's profit or loss, the publication explains. A loss of $12 billion in three months would be one of the largest quarterly losses among technology companies in history - almost comparable to the $13 billion in annual revenue that management says OpenAI expects to generate this year.

OpenAI CEO Sam Altman has repeatedly warned investors that the company will be unprofitable for a long time to maintain its technology leadership in a field he believes has the potential to change the global economy. "Whether we burn $500 million a year, $5 billion or $50 billion - I don't care. Honestly, don't care," the WSJ quoted him as saying at Stanford last year. - It's going to be expensive. But it's totally worth it."

Remaining unprofitable, developer ChatGPT is preparing one of the largest IPOs in history with a possible valuation of up to $1 trillion, Reuters wrote on October 29, citing sources. According to them, CFO Sarah Fryer told partners that the company plans to list in 2027, but some advisers believe the offering could happen earlier - by the end of 2026. OpenAI is nearing an IPO after completing a restructuring that reduced the company's reliance on early investor Microsoft. The restructuring resulted in the creation of OpenAI's commercial structure, which is valued at $500 billion. Microsoft's stake in it amounted to 27.5%.

According to Reuters' sources, annual revenue for OpenAI, which is now valued at $500 billion, will reach $20 billion by the end of the year, but losses continue to mount. Altman said going public is the "most likely way" to raise the capital needed for large-scale investments in artificial intelligence infrastructure.

This article was AI-translated and verified by a human editor