"OpenAI has squeezed better margins out of its paid products this year, as it races to maintain its pole position in artificial intelligence, according to a report in The Information. The publication reported that the company improved its "compute margin," an internal figure measuring the share of revenue after the costs of running models for paying users of its corporate and consumer products."
"At the same time, the company is facing intense pressure over its spending and renewed competition. After the Gemini model from Alphabet Inc.'s Google performed better on benchmarks, OpenAI Chief Executive Officer Sam Altman called a " code red " to redirect internal resources to improve ChatGPT, and delayed progress on plans for an advertising service. Most people use ChatGPT's free version."
OpenAI's compute margin rose to about 70% by October, up from 52% at the end of 2024 and double January levels. The company declined to comment on those figures. OpenAI has not yet shown a profit despite a $500 billion valuation, raising investor concerns about an AI bubble. Google's Gemini outperformed on benchmarks, prompting Sam Altman to call a "code red," reallocate resources, and delay an advertising service. Most users rely on ChatGPT's free version while the company pushes paid business features. OpenAI reportedly has better paid-account compute margins than Anthropic and is in early talks with Amazon to raise at least $10 billion and use Amazon chips.
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