OpenAI on the Brink of Financial Collapse
George Noble, founder of the renowned hedge fund and manager of Fidelity Overseas, has warned that OpenAI is nearing complete collapse due to its enormous operating costs and intensifying competition, particularly from Chinese open-source models like DeepSeek. In a post on the X platform, Noble asserted that the company needs to generate over $143 billion in revenue before becoming profitable, a goal that seems unattainable in the coming years, making an initial public offering (IPO) a move that could accelerate the crisis rather than resolve it.
Massive Financial Losses: $12 Billion in a Single Quarter
Noble based his claims on data from Microsoft (which owns a significant stake in OpenAI), indicating that the company incurred losses of up to $12 billion in a single fiscal quarter. He also cited Deutsche Bank estimates showing cumulative negative cash flows of up to $143 billion before reaching the break-even point. Bank analysts described this situation as "unprecedented in the history of startups," as no other tech company had ever suffered such a large number of losses in such a short period.
Chinese Competition and Emerging Markets
Nobel highlighted the dominance of China's DeepSeek in emerging markets, particularly in Africa, where it enjoys immense popularity thanks to its low cost and open-source nature. A Microsoft study showed that DeepSeek holds an 18% market share in Ethiopia and 17% in Zimbabwe, and is approaching 50% in countries facing US sanctions, such as Belarus and Cuba. This widespread adoption reflects China's advantage in providing cheap and accessible solutions, while US models suffer from regulatory constraints and high costs.
Sarah Frier's Statements and Bubble Fears
Statements by CFO Sarah Frier in November 2025 fueled concerns when she called on the US government for direct financial support for the company. These statements drew widespread criticism, and reports such as The New York Times considered them evidence that OpenAI was increasingly reliant on government support and foreign investment to cover its losses.
Multiple reports confirm the financial crisis
- Fortune: Confirmed that the company will not become profitable before 2030 and needs $207 billion to implement its growth plans.
- The New York Times: Quoted Sebastian Mallaby as saying that cash will run out soon, and it may end up being fully acquired by Microsoft or Amazon.
- Toms Hardware: Predicted a possible bankruptcy by mid-2026 if current spending continues ($8 billion in 2025, $40 billion by 2028).
- The Stargate project (a $1.2 trillion data center conglomerate) is one of the biggest spending burdens.
Fierce competition and Sam Altman's response:
OpenAI experienced a decline in traffic during November and December 2025 and lost a major client like Salesforce, which migrated to Gemini after the launch of the new version. Altman declared an internal emergency, shifting all teams to work on ChatGPT and deciding to add ads to some paid plans to increase revenue.
Will OpenAI survive or collapse?
Despite the massive funding Sam Altman has raised, the company's enormous infrastructure spending, lawsuits (nine in total, plus Elon Musk's $134 billion suit), and increasing competition from China and Europe have cast a shadow over its future. Experts believe OpenAI could face a complete takeover or a radical restructuring in the next few years unless it can transform its business model to achieve rapid profitability.
