Costs Of ChatGPT Revolution: A Dark Cloud Over It

(CTN News) – One question rarely asked: Who can afford generative AI? As it developed ChatGPT last year, OpenAI lost approximately $540 million and estimates it will need $100 billion to reach its goals, according to industry publications.

The founder of OpenAI, Sam Altman, recently told a panel that the company will be the most capital-intensive startup in the history of Silicon Valley.

When Microsoft, which invested billions of dollars in ChatGPT OpenAI, is asked how much its AI adventure will cost, it reassures that it is keeping a close eye on its profitability.

Creating anything near the scale of OpenAI, Microsoft, or Google would require an eye-watering investment in state-of-the-art chips and recruiting prize-winning researchers.

Often, people are unaware of how much processing power is required to perform significant amounts of AI work such as ChatGPT. An independent analyst, Jack Gold, stated that the cost of training these models can range from tens to hundreds of millions of dollars.

The question is, “How many companies are capable of purchasing tens of thousands of Nvidia H100 systems at a cost of tens of thousands of dollars each?” Gold questioned.

There is pretty much no one who can build the infrastructure, so if you cannot build it, you rent it, which is what most companies do now by outsourcing their computing needs to Microsoft, Google, and Amazon’s AWS & ChatGPT .

With the advent of generative artificial intelligence, this reliance on cloud computing and technology giants is likely to deepen, leaving the same players in charge, experts have warned.

It has been heavily ChatGPT underestimated

Stefan Sigg, Chief Product Officer at Software AG, which develops business-oriented software, states that the unpredictable costs of cloud computing are a significant concern for many companies.

Sigg compares cloud costs to electricity bills and warns that companies unaware of the costs they are incurring could be in for a “big surprise” if they allow their engineers to run up bills in the mad rush to build technology, including artificial intelligence.

Some observers believe that Microsoft’s all-in bet on ChatGPT AI is really about safeguarding Azure’s success and ensuring the future of the company’s cash cow.

For many years, Azure has been the unsexy breadwinner for the giant, earning huge profits but without attracting the attention of an iPhone or social media.

According to Dan Ives of Wedbush Securities, for Microsoft, “the golden goose is monetising cloud with Azure, because we are talking about what could be a $20, $30, $40 billion opportunity annually down the road.”

As Microsoft’s CEO, Satya Nadella contends that generative artificial intelligence is “moving in the right direction.” Nadella has a grace period of six to nine months to prove that his bet is a sound one, according to Ives.

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