OpenAI Is Spending Billions To Stay Ahead In AI—But JPMorgan Warns This 'Vibe Spending' Could Push Investors To Their Limit

ChatGPT-parent OpenAI may be leading the AI arms race, but its spending habits are raising eyebrows on Wall Street.

What Happened: In a rare note covering a private company on Friday, JPMorgan Chase & Co. JPM analysts Brenda Duverce and Lula Sheena cautioned that OpenAI's aggressive spending on talent and R&D—what they dubbed "vibe spending"—could test investors' patience, reported Business Insider.

According to the note, OpenAI is expected to burn $46 billion over the next four years. While the company has raised $57 billion in just two and a half years, the analysts said profitability may not arrive until 2029. Investor expectations will be "tested," they wrote.

One major cost driver: retaining top AI talent. Meta Platforms Inc.'s META new superintelligence lab has already poached several researchers from OpenAI, reportedly offering compensation well over $100 million.

Seven of Meta's first 10 hires came directly from OpenAI.

Also Read: Oracle’s AI Ambitions Take Flight After Record Cloud Growth: What Do Analysts Really Think?

Still, JPMorgan sees major upside. The firm said OpenAI has a strong first-mover advantage, with its app surpassing 500 million weekly active users this spring—more than 70% of AI app downloads globally in markets where it competes.

The bank also cited India as a key growth market where OpenAI is already overtaking Alphabet Inc.'s GOOG GOOGL Google.

Additionally, OpenAI's $6.5 billion acquisition of Jony Ive's hardware startup could create a hardware-software "flywheel," driving revenue through devices and more profitable subscriptions.

Why It Matters: This marks the first time JPMorgan has analyzed a private tech firm like OpenAI, underscoring the company's growing influence.

However, the note also questions whether OpenAI's lead is sustainable. Having the "best AI model" is not a robust moat," the analysts warned, noting that model performance is converging across competitors.

Meanwhile, on Monday, it was reported that six months after its White House debut, the $500 billion Stargate project—a joint AI infrastructure venture between OpenAI and SoftBank Group SFTBF SFTBY—has stalled.

Despite promises of a $100 billion immediate investment, it has yet to secure a major data center deal and is now focusing on a smaller facility in Ohio.

As per the report, disagreements over structure, control and strategy between OpenAI and SoftBank have led to delays and scaled-back ambitions, with leadership tensions between Sam Altman and Masayoshi Son slowing progress.

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