OpenAI CEO Sam Altman revealed that the Microsoft-backed (MSFT) generative AI company is losing money on its $200-per-month ChatGPT Pro plan due to unexpectedly high usage. Altman admitted on X (formerly Twitter) that he personally set the price, assuming that it would turn a profit. ChatGPT Pro, which launched late last year, offers access to OpenAI’s enhanced o1 “reasoning” model and other advanced tools like its Sora video generator.
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Despite the hefty $2,400 annual fee, early adopters seem to be getting their money’s worth at OpenAI’s expense. This isn’t the first time OpenAI’s pricing has been experimental. Indeed, Altman told Bloomberg that the initial premium plan price of $20 was set without extensive research after $42 proved to be too high for customers. OpenAI’s financial struggles continue, with reported losses of $5 billion on $3.7 billion in revenue last year.
OpenAI’s expenses—such as staffing, office costs, and AI infrastructure—have been significant, with ChatGPT alone costing $700,000 daily at one point. To become profitable, OpenAI is considering new pricing strategies that include potential subscription increases and usage-based fees. Nevertheless, the company is optimistic about its future, as it projects $11.6 billion in revenue this year and aims to hit $100 billion by 2029.
Is MSFT Stock a Buy?
Although you cannot directly invest in OpenAI, you can buy shares of Microsoft, which has a 49% stake in the company. And according to analysts, Microsoft stock has a Strong Buy consensus rating among 29 Wall Street analysts. That rating is based on 27 Buys and two Holds assigned in the last three months. After a 15% rally in its share price over the past 12 months, the average MSFT price target of $503.61 implies 18.2% upside potential.
