OpenAI Faces $207 Billion Funding Gap by 2030 Despite Massive Cloud Computing Deals

OpenAI needs to raise at least $207bn by 2030 so it can continue to lose money, HSBC estimates

OpenAI is a money pit with a website on top. That much we know already, but since OpenAI is a private company, there's a lot of guesswork required when estimating the depth of the pit. HSBC's US software and services team has today updated its OpenAI model to include the company's $250bn rental of cloud compute from Microsoft, announced late in October, and its $38bn rental of cloud compute from Amazon announced less than a week later. The latest two deals add an extra four gigawatts of compute power to OpenAI's requirements, bringing the contracted amount to 36 gigawatts. Based on a total cumulative deal value of up to $1.8tn, OpenAI is heading for a data centre rental bill of about $620bn a year -- though only a third of the contracted power is expected to be online by the end of this decade. To check OpenAI ability to pay, HSBC's team first had to build a model to forecast revenues. Its starting point is to put user numbers on an S-curve that by 2030 reaches 3bn, "equivalent to 44 per cent of the world's adult population" ex China. That's versus an estimated total user base last month of approximately 800mn: Advertising, agentic AI and possibly even Jony Ive's thing can contribute to revenue by the end of the decade, For now, the business is mostly cajoling this user base to sign up for subscriptions. LLM subscriptions will become "as ubiquitous and useful as Microsoft 365", HSBC says. It models that by 2030, 10 per cent of OpenAI users will be paying customers, versus an estimated 5 per cent currently. The team also assumes LLM companies will capture 2 per cent of the digital advertising market in revenue, from slightly more than zero currently. What results is gangbusters revenue growth: ... but with a parallel rise in costs, meaning OpenAI is expected to still be subsidising its users well into next decade: ... meaning each new OpenAI fundraise will be for shovelling cash to data centre owners: For what it's worth, we can summarise a few of the assumptions HSBC is making for the estimates above: The bottom line is that, for OpenAI, it's nowhere close to enough. HSBC's model assumes that OpenAI's rental costs will be a cumulative $792bn between the current year and 2030, rising to $1.4tn by 2033. The projection matches OpenAI's eight-year guidance that CEO Sam Altman is exasperated at being asked to discuss. OpenAI's cumulative free cash flow to 2030 may be about $282bn, it forecasts, while Nvidia's promised cash injections and the disposal of AMD shares can bring in another $26bn. The broker also includes OpenAI's $24bn of undrawn debt and equity facilities and, at the 2025 mid-year point, its $17.5bn of available liquidity. Squaring the first total off against the second leaves a $207bn funding hole, to which HSBC adds a $10bn cash buffer for safety's sake. These estimates might prove overly cautious, though guessing how is a finger-in-the-air exercise. Each extra 500mn users OpenAI can grab will add about $36bn to cumulative revenue between now and 2030, while converting 20 per cent of the customers to paid subscriptions might bring in an additional $194bn over the same period, HSBC says. Assumptions for LLM spend and computing costs are flexed in similar ways, though the possibility of OpenAI chancing on Artificial General Intelligence is not put through the model. If revenue growth doesn't exceed expectations and prospective investors turn cautious, OpenAI would need to make some hard decisions. Oracle has spooked debt markets, Microsoft's support for OpenAI has been a bit flip-flop lately, and the next-biggest shareholder is SoftBank. The best worst option might be to call in some favours and walk away from data centre commitments, either before or at the usual contracted period of four to five years. HSBC says: Given the interlaced relationships between AI LLM, cloud, and chips companies, we see a case for some degree of flexibility at least from the larger players (less so for the neo clouds): less capacity would always be better than a liquidity crisis. What might not be clear from the above is that the HSBC software team is very, very bullish on AI as a concept. Here's an entirely representative section of the note: We expect AI to penetrate every production process and every vertical, with a great potential for productivity gains at a global level. [ . . . ] Some AI assets may be overvalued, some may be undervalued too. But eventually, a few incremental basis points of economic growth (productivity-driven) on a USD110trn+ world GDP could dwarf what is often seen as unreasonable capex spending at present. And when it's put like that, is $207bn to tide things over really such a big ask?

OpenAI's compute rental outgo could see $207 billion shortfall, HSBC estimates - The Economic Times

HSBC analysts project OpenAI could face a significant compute rental shortfall by 2030, despite substantial new cloud deals with Microsoft and Amazon. Even with projected revenue growth from various AI ventures, the company's massive compute needs may outpace its financial capacity, potentially leaving a substantial deficit.OpenAI could fall short of its compute rent requirements even if it maintains its current growth trajectory, according to the latest estimates by HSBC analysts for the artificial intelligence (AI) major. The US software and services team at the multinational bank has updated its OpenAI model to factor in the $250 billion of rented cloud compute from Microsoft announced late in October, and another $38 billion from Amazon, finalised the week after. These two deals would add four gigawatts to OpenAI's total contracted compute capacity, bringing its total to 36 GW. However, only a third of this power is expected to come online by the end of this decade. Revenue and expenses By certain estimates, OpenAI has an annual revenue of $13 billion, with 5% of the current user base opting for one of its paid subscription plans. In the latest financial model, HSBC estimates the company will earn from advertising, agentic AI, and the AI hardware Jony Ive is working on. It pegs consumer AI revenue at $129 billion by 2030, with $87 billion coming from search and $24 billion from advertising. Enterprise AI revenue could be $386 billion in the same period. The Sam Altman-led company will likely generate free cash flow of $282 billion during this period, per HSBC estimates. Nvidia's promised cash injections and the disposal of AMD shares can bring in another $26 billion. In addition, $24 billion of undrawn debt and equity facilities, and $17.5 billion of available liquidity as of mid-2025 are also on its books. Meanwhile, OpenAI could face a rental bill of $702 billion by 2030, and $1.4 trillion by 2033. This could leave a $207 billion hole in its finances, HSBC estimates. Way ahead Every 500 million users OpenAI adds will add around $36 billion to its cumulative revenue between now and 2030, HSBC said. Converting 20% of them to paid subscribers can lead to an additional $194 billion windfall during this period, it added. Notably, this model does not factor in the eventuality of OpenAI achieving artificial general intelligence, the next big thing every AI company is gunning for. If the revenue doesn't exceed expectations and investors turn cautious, OpenAI might have to walk away from some of its data centre commitments, HSBC pointed out. Also Read: Sam Altman acknowledges 'economic headwinds' for OpenAI as Google's AI gains pace