Artificial intelligence (AI) start-up company OpenAI, which is heavily backed by Microsoft (MSFT), has reported $10 billion in annual recurring revenue.
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The $10 billion milestone has been achieved less than three years after OpenAI launched its popular ChatGPT chatbot. The revenue figure includes sales from the company’s consumer products, ChatGPT business products, and its application programming interface, or API.
The figure excludes licensing revenue that OpenAI receives from Microsoft, as well as one-time deals. While the $10 billion revenue milestone is impressive, San Francisco-based OpenAI remains unprofitable, having lost about $5 billion in 2024.
Profitability?
While OpenAI has said that it is targeting $125 billion in revenue by 2029, the company has not set a deadline for achieving profitability, or said when it might go public. However, the newest revenue metrics help to justify OpenAI’s huge valuation.
The AI start-up closed a $40 billion funding round in March of this year, which was the biggest private technology deal on record. OpenAI came to prominence with the release of the consumer version of ChatGPT in late 2022. Today, the company supports 500 million weekly active users, and claims to have three million paying business users.
Is MSFT Stock a Buy?
Microsoft’s stock has a consensus Strong Buy rating among 36 Wall Street analysts. That rating is based on 31 Buy and five Hold recommendations issued in the last three months. The average price target on MSFT stock of $514.93 implies 8.95% upside from current levels.
