ChatGPT cost a fortune to make with OpenAI's losses growing to $540 million last year, report says

• OpenAI's losses climbed to $540 million in 2022 as it developed ChatGPT, a new report claims.
• The Information said that the startup's costs soared in the months before it launched the chatbot.

It turns out ChatGPT wasn't cheap to make.

OpenAI's development of the technology came at a steep price, with its losses roughly doubling to around $540 million last year, a new report claims.

That's according to The Information, which cited three people with knowledge of OpenAI's financials.

Though OpenAI managed to secure a multi-year, multi-billion dollar investment from Microsoft earlier this year, the figure highlights just how much the startup was racking up in costs in its mission to roll out a commercial AI product.

The costs to build and run ChatGPT come down to its need for serious computing power that plays a central role in generating answers to user prompts.

Last month, Dylan Patel, chief analyst at consulting firm SemiAnalysis, told The Information that he believed ChatGPT could cost OpenAI around $700,000 per day to use given the costs involved with computing power.

John Hennessy, chairman of Google's parent company Alphabet, has previously said that a search on Google's own chatbot Bard costs 10 times as much as a regular search.

Though OpenAI has strengthened its financial position with Microsoft's backing, growing demand for its chatbot — which became the fastest-growing consumer app in history after tallying 100 million monthly active users within two months — will add further cost pressure.

Earlier this week, OpenAI CEO Sam Altman alluded to rising costs, suggesting that it was "going to be the most capital-intensive startup in Silicon Valley history," The Information reported.

The report suggested that Altman has "privately suggested" that OpenAI could try to raise around $100 billion in the coming years as it works towards developing artificial general intelligence (AGI) – AI as powerful as the human brain.

The popularity of generative AI tools such as ChatGPT have grown rapidly in recent months as users have found the technology can offer several benefits such as boosts to productivity. Investors are likewise lured by the prospect of the technology upending multiple industries.

OpenAI's revenue is projected to rise significantly this year, with expectations that revenue will hit $200 million this year before climbing to $1 billion in 2024, according to Reuters.

OpenAI did not immediately respond to Insider's request for comment.