A new analysis suggests that OpenAI could face serious financial pressure and may run out of cash by mid-2027, raising questions about how sustainable the economics of frontier AI development really are. The argument comes from Sebastian Mallaby, an economist and senior fellow at the Council on Foreign Relations, who recently examined the company’s spending patterns and long-term funding challenges.
The concern is closely tied to the high cost of building and operating advanced AI systems; OpenAI is expected to spend heavily on computing infrastructure, research, and large-scale model training. External projections have estimated that the company could burn through around $8 billion in 2025, with expenses potentially climbing to $40 billion by 2028. At the same time, reports indicate that the company expects to reach profitability only by 2030, which creates a significant funding gap in the years ahead.
Mallaby also highlights how difficult it is for newer AI-focused companies to compete financially with long-established technology giants—companies like Microsoft, Meta, or Google.
These rivals already generate large profits from existing businesses, allowing them to invest heavily in AI while absorbing short-term losses, but OpenAI, by comparison, must rely more heavily on continuous investment and fundraising to maintain its pace of development.
Another factor is the challenge of turning widespread AI adoption into stable revenue, since many users currently access AI tools through free tiers and may switch platforms if prices rise, ads appear, or limits are introduced. This makes it harder for AI companies to build long-term loyalty in the short term.
However, the analysis also notes that this dynamic could change if “agentic” AI becomes more integrated into daily life, potentially increasing user dependence and reducing switching.
Even so, Mallaby argues that OpenAI’s large-scale ambitions and infrastructure costs may outpace its ability to generate enough profit quickly. While OpenAI has attracted massive investment—reportedly including a $40 billion funding round—its long-term business model remains under scrutiny as costs continue to rise.
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