The alarm bells are going off at OpenAI.
What was once a healthy lead over its competition thanks to its blockbuster AI chatbot ChatGPT has turned into a razor-thin edge, motivating OpenAI CEO Sam Altman to declare a “code red.”
The financial stakes are almost comical in their magnitude: The company is lighting billions of dollars on fire, with no end in sight; it’s committed to spending well over $1 trillion over the next several years while simultaneously losing a staggering sum each quarter.
And revenues are lagging far behind, with the vast majority of ChatGPT users balking at the idea of paying for a subscription.
Meanwhile, Google has made major strides, quickly catching up with OpenAI’s claimed 800 million or so weekly active ChatGPT users as of September. Worse yet, Google is far better positioned to turn generative AI into a viable business — all while minting a comfortable $30 billion in profit each quarter, as the Washington Post points out.
The question on many investors’ minds: if the AI bubble were to collapse, would OpenAI even survive?
“We’re going to see a situation where ChatGPT was the early winner,” Porter and Co. equity analyst Ross Hendricks told WaPo. “They’re going to end up just like MySpace did with the inability to truly monetize and break away from the pack.”
In a Thursday note, Deutsche Bank analyst Jim Reid estimated staggering losses for OpenAI amounting to $140 billion between 2024 and 2029.
“OpenAI may continue to attract significant funding and could ultimately develop products that generate substantial profits and revolutionize the world,” he wrote, as quoted by WaPo. “But at present, no start-up in history has operated with expected losses on anything approaching this scale.”
“We are firmly in uncharted territory,” Reid added.
To even just cover the interest on all the money OpenAI is borrowing, the company’s revenues will have to grow immensely. But according to recent Sensor Tower data reviewed by WaPo, ChatGPT’s monthly active users grew by a mere five percent between July and November. Google’s Gemini AI app soared by a far healthier 30 percent over the same period.
Recent data also suggests ChatGPT user growth is stalling out in Europe, highlighting a slowdown that couldn’t come at a worse time for OpenAI.
Google’s latest Gemini 3, in particular, impressed when it was announced released last month, with benchmarks exceeding OpenAI’s most powerful AI models. Its Nano Banana Pro AI image model has also pushed the envelope, while OpenAI’s Sora video-generating app has received comparatively little media attention after a storm of controversy surrounding its rollout.
It’s not just Google, either. OpenAI is also facing steep competition from open-source AI models in China, like the startup DeepSeek, whose extremely energy-efficient R1 model threw Silicon Valley into chaos earlier this year.
In short, by many indications, OpenAI appears to be in deep water, and analysts are growing wary of the company burning through astronomical amounts of money at an unprecedented pace.
Even the so-called “Godfather of AI” and former Google AI lead, Geoffrey Hinton, isn’t optimistic about OpenAI’s future.
“I think it’s actually more surprising than it’s taken this long for Google to overtake OpenAI,” he told Business Insider this week.
“I think that right now they’re beginning to overtake it,” he added. “Google has a lot of very good researchers and obviously a lot of data and a lot of data centers.”
“My guess is Google will win,” Hinton concluded.
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