OpenAI improves margins on paid products as AI spending race intensifies

OpenAI has reported improved margins from its paid products this year as it pushes to strengthen its position in the intensifying artificial intelligence race, according to a report by The Information.

The publication stated that OpenAI has increased its internal “compute margin”, a measure of revenue remaining after the cost of running AI models for paying users across corporate and consumer offerings. As of October, compute margins reached 70 per cent, compared with 52 per cent at the end of 2024 and roughly half that level in January 2024, The Information reported, citing a person familiar with the figures.

According to a separate Bloomberg report, an OpenAI spokesperson said the company does not publicly release such figures and declined to comment further.

OpenAI, which triggered the current AI boom through ChatGPT, has yet to post a profit, a key concern for investors wary of overheating in the sector. The company was last valued at $500 billion in October and has been exploring new revenue streams to offset its substantial computing costs and ambitious infrastructure investments.

At the same time, OpenAI is facing mounting pressure over spending and growing competition. After Alphabet-owned Google’s Gemini model outperformed on several benchmarks, OpenAI chief executive Sam Altman reportedly called a code red internally to refocus resources on improving ChatGPT, while also slowing work on a planned advertising business.

While most users continue to rely on ChatGPT’s free version, OpenAI has been increasingly promoting its business-focused offerings and paid software tools aimed at sectors such as financial services and education, where it competes with Google and rival AI firm Anthropic.

The Information reported that OpenAI currently enjoys stronger compute margins than Anthropic for paid accounts, although Anthropic is said to have greater overall efficiency in server spending.

Separately, OpenAI is understood to be in early discussions to raise at least $10 billion from Amazon.com and to potentially use the company’s chips, a deal that could value OpenAI at more than $500 billion, according to reports.