This could also be (at least partly) a reaction to Microsoft threatening to pull OpenAI's cloud credits last year. OpenAI wants to maintain independence and with compute accounting for 25–50% of their expenses (currently) [2], this strategy may actually be prudent.
[1] https://www.cnbc.com/2025/01/03/microsoft-expects-to-spend-8...
But to answer your question, no they aren’t even profitable by themselves.
Depends on your definition of profitability, They are not recovering R&D and training costs, but they (and MS) are recouping inference costs from user subscription and API revenue with a healthy operating margin.
Today they will not survive if they stop investing in R&D, but they do have to slow down at some point. It looks like they and other big players are betting on a moat they hope to build with the $100B DCs and ASICs that open weight models or others cannot compete with.
This will be either because training will be too expensive (few entities have the budget for $10B+ on training and no need to monetize it) and even those kind of models where available may be impossible to run inference with off the shelf GPUs, i.e. these models can only run on ASICS, which only large players will have access to[1].
In this scenario corporations will have to pay them the money for the best models, when that happens OpenAI can slow down R&D and become profitable with capex considered.
[1] This is natural progression in a compute bottle-necked sector, we saw a similar evolution from CPU to ASICS and GPU in the crypto few years ago. It is slightly distorted comparison due to the switch from PoW to PoS and intentional design for GPU for some coins, even then you needed DC scale operations in a cheap power location to be profitable.
> they (and MS) are recouping inference costs from user subscription and API revenue with a healthy operating margin.
I didn't find any reliable sources about OpenAI. All sources that I could find state this is not true -- inference costs are far higher than subscription fees.
I hate to ask this on HN... but, can you provide a source? Or tell us how do you know?
It is just an educated guess factoring costs of running similar/comparable models to 4o or 4o-mini per token, and how azure commitments work with OpenAI models[2], also knowing that Plus subscriptions are probably more profitable[1] than API calls.
It would be hard for even OpenAI to know with any certainty because they are not paying for Azure credits like a normal company. The costs are deeply intertwined with Azure and would be hard to split given the nature of the MS relationship[3]
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[1] This is from experience of running LibreChat using 4o versus ChatGPT Plus for ~200 users, subscriptions should quite profitable than raw API by a order of 3 to 4x, of course different types of users and adoption levels will be there my sample while not small is not likely representative of their typical user base.
[2] MS has less incentive to subsidize than say OpenAI themselves
[3] Azure is quite profitable in the aggregate, while possibly subsidizing OpenAI APIs, any such subsidy has not shown up meaningfully in Microsoft financial reports.