"Companies have poured hundreds of billions of dollars into snazzy new data centers and absurdly well compensated research teams in hopes of building powerful, wildly profitable AI models. That's despite the fact that even the most innovative AI companies still have modest revenues."
"In late February, OpenAI announced that it had raised $110 billion to continue building its world-leading frontier models. The deal values OpenAI at between $730 and $840 billion. And perhaps more importantly, the round was led by massive companies and institutional investors, lending that valuation some real credibility."
Industry observers have long predicted an AI bubble collapse, given the massive capital investments in data centers and research teams relative to actual revenues. OpenAI earned $20 billion in 2025, comparable to Frito-Lay's chip sales and less than struggling Ross department stores generate. This revenue-to-investment ratio appears unsustainable. However, OpenAI's recent $110 billion funding round, led by major institutional investors and valuing the company at $730-$840 billion, indicates the bubble is not bursting. The involvement of credible institutional investors lends legitimacy to the valuation, suggesting continued confidence in AI's future profitability despite current financial realities.
Read at Fast Company
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