OpenAI's Growth Slows, Costs Mount

Artificial intelligence development firm OpenAI is experiencing a slowdown in its growth, facing difficulties in meeting its own targets. OpenAI has failed to achieve its self-set goals for new user acquisition and revenue growth, raising concerns about escalating costs and new challenges across the AI industry. Chief Financial Officer (CFO) Sarah Friar has warned executives that if revenue growth is not fast enough, the company may struggle to afford its massive computing contract costs in the future.

This news has negatively impacted the stock prices of semiconductor companies like Nvidia and AMD, as well as AI infrastructure-related firms such as Oracle. OpenAI has partnerships with Nvidia and Oracle, though Oracle sought to dismiss concerns, emphasizing that adoption of OpenAI's technology is rapidly expanding. Oracle stated it is supplying computing power to OpenAI through a five-year contract worth $300 billion.

Amid diagnoses that generative AI has passed its peak and entered the 'valley of disillusionment,' major AI players, including OpenAI, are enduring substantial losses due to computing infrastructure and research and development (R&D) expenses, despite revenue growth. Losses are projected to reach approximately $14 billion in 2026, with profitability expected to be deferred until after 2029.

The implications of OpenAI's growth slowdown for the domestic AI ecosystem and the government's preparations to address them are drawing attention.