OpenAI projects cumulative negative free cash flow of up to $278 billion by 2030

OpenAI is pursuing a new funding round at an elevated valuation while disclosing that its free cash flow will remain deeply negative over the next five years, highlighting significant long-term financial pressure.

Key Financial Projections

According to a recent presentation document obtained by the Financial Times and reported on September 18, OpenAI projects:

• Up to $278 billion in negative free cash flow over the next five years, driven primarily by massive expansions in computing capacity and infrastructure
• Revenue of $350 billion by 2030, compared with an estimated $36 billion in 2026
• Nearly tenfold growth over six years, with cumulative revenues from 2026 to 2030 totaling approximately $840 billion

Funding Round and Valuation

The parent company of ChatGPT is negotiating a new funding round with investors, with potential valuations reportedly reaching as high as $1.2 trillion. Sources close to the company indicate that OpenAI is pushing to finalize the deal at an even higher valuation.

These plans imply that OpenAI will continue to rely on external capital injections for the coming years. After completing a $122 billion funding round in March this year, the company estimates it could exhaust those funds as early as 2028 at the current burn rate, posing a direct test to its established financial arrangements and hardware procurement contracts.

Revenue Growth vs. Spending Pressure

Despite the negative cash flow outlook, OpenAI's revenue trajectory shows promise:

• Revenues are expected to grow from $36 billion this year to $350 billion by 2030
• In July, following the release of new models, OpenAI's annualized revenue grew by approximately 20% month-over-month
• Earlier projections from May this year indicated a five-year free cash flow gap as high as $305 billion; this figure has since narrowed, reflecting commercialization progress that has exceeded expectations to some extent

However, spending far outpaces revenue growth. The documents estimate that cumulative expenditures on computing capacity and infrastructure alone will reach approximately $856 billion by 2030, making it the single largest cost item.

Competitive Pressure and Price Cuts

While growing revenues, OpenAI faces intensifying market competition:

• To capture enterprise customers, the company has significantly cut product prices
• It competes with U.S. rival Anthropic for market share
• It also faces challenges from low-cost "open-weight" models
• The resulting price war compresses profit margins and further increases reliance on external financing

Supply Chain Implications

OpenAI's financial situation impacts an extensive supply chain. According to the Financial Times, major technology groups such as Nvidia, Oracle, and SoftBank's data center business have largely bet their future revenues on contracts signed with OpenAI. Any delay in OpenAI's fundraising pace would put pressure on the performance expectations of these related companies.

IPO Plans Delayed

In the capital markets:

• OpenAI had previously planned to go public this autumn and confidentially filed listing documents with the U.S. Securities and Exchange Commission (SEC) in June
• The process was subsequently postponed
• The official reason cited was growing public concern about risks associated with the rapid development of artificial intelligence
• However, some investors revealed that another consideration behind the delay was internal concerns about whether the market could assign a reasonable valuation to a persistently loss-making company

Meanwhile, competitor Anthropic is expected to go public this autumn and may set a record for the largest tech IPO in history, complicating OpenAI's choice of optimal timing for its own listing.

This article is reprinted from Wall Street Insight, authored by Bao Yilong; edited by Zhang Jinliang for Zhitong Finance.