OpenAI Improves Compute Margins Amid AI Profitability Push

OpenAI has achieved a compute margin of 70% as of October 2025, up from 52% at the end of 2024, according to internal figures. This metric measures revenue after costs for running AI models for paying users of its corporate and consumer products. The improvement highlights the company's efforts to enhance efficiency as it navigates high computing expenses and intensifying competition in the artificial intelligence sector.

An OpenAI spokesperson confirmed the company does not publicly release such figures and declined further comment.

Background on OpenAI's Financial Challenges

OpenAI, the creator of ChatGPT, ignited the current AI boom but has not yet turned a profit. Valued at $500 billion in October 2025, the company continues to incur substantial costs for computing power and infrastructure to support its ambitious AI development. These expenses have raised concerns among investors about potential overvaluation in the AI industry.

Most users access the free version of ChatGPT, but OpenAI is emphasizing its paid offerings, including business versions and specialized software for sectors like financial services and education. These products position the company against competitors such as Alphabet's Google and Anthropic.

The reported compute margins for OpenAI's paid accounts exceed those of Anthropic, though Anthropic demonstrates greater overall efficiency in server spending.

Competitive Pressures and Internal Responses

OpenAI faces mounting competition, particularly after Google's Gemini model outperformed on key benchmarks. In response, Chief Executive Officer Sam Altman declared a "code red," reallocating internal resources to bolster ChatGPT and delaying plans for an advertising service.

This internal urgency comes as OpenAI pushes to maintain its leadership in generative AI. The company is also exploring new revenue streams, with a focus on enterprise solutions to drive higher-margin sales.

Funding Talks and Valuation Outlook

OpenAI is in preliminary discussions to raise at least $10 billion from Amazon, which could involve using Amazon's chips. Such a deal might value the company at more than $500 billion, providing capital to fuel further AI advancements and infrastructure expansion.

These negotiations underscore the high stakes in the AI race, where access to computing resources and talent remains critical. As OpenAI scales its operations, improving margins on paid products becomes essential to achieving long-term sustainability.

Broader Industry Context

The AI sector is experiencing rapid growth but also scrutiny over spending levels. Investors worry about a potential bubble, though some argue that innovation justifies the investments. OpenAI's margin improvements signal progress in monetizing its technology, but profitability remains elusive amid escalating costs.

Competitors like Anthropic and Google are also optimizing operations, with varying efficiencies in compute and server utilization. For OpenAI, success in business sales could be pivotal in sustaining its position while addressing investor concerns about fiscal health.

The company's trajectory reflects the broader challenges of the AI industry: balancing groundbreaking innovation with the financial realities of massive computational demands.