OpenAI and Anthropic are racing toward potentially record-breaking IPOs by the end of the year. 

An inside look at the financials of both companies prior to funding rounds completed earlier this year shows their Achilles’ heel: the soaring costs needed to train new AI models.

OpenAI expects to spend $121 billion on computing power for AI research in 2028. That means the company anticipates burning $85 billion that year even after almost doubling sales from the prior year. Such losses would dwarf that of virtually any other public company in history. Anthropic doesn’t expect to spend nearly as much, but its rosiest forecasts tell a similar story of mounting computing costs.  

Both companies are releasing new versions of their AI models at a faster cadence than ever before, while pouring more resources into the training runs that create them. The arms race is showing no signs of slowing.

Below are charts drawn from confidential financial documents that both companies shared with investors ahead of their latest funding rounds. They offer a window into the economics of the two largest AI labs in the world. The Information earlier reported some of the figures. 

What It Costs to Build a Digital Brain

One defining factor of each startup’s balance sheets is the runaway spending tied to training new AI models. The reason: Each jump in intelligence is harder to come by, and costs more than the last one. OpenAI expects to spend much more money than Anthropic training new models in the coming years.

The costs are set to be so mind-bogglingly high that both companies report two different measures of profitability—one that includes training costs, and one that leaves them out. 

Strip out “compute for research,” and OpenAI is actually on track to turn a small pretax operating profit this year, as is Anthropic under its best-case scenario. Add it back in, and OpenAI doesn’t expect to break even until the 2030s. Anthropic forecasts reaching that milestone sooner. 

An OpenAI spokesperson said the company is giving priority to growth over profits, and could dial back spending on training but expects a strong return on investment.

Exploding Revenue

Venture-capital firms have stomached vast losses in part because OpenAI and Anthropic are among the fastest-growing businesses in the history of tech. Each expects to more than double revenue this year, thanks largely to business customers’ adoption of new AI tools. 

OpenAI was caught flat-footed after Anthropic released a new version of its coding tool Claude Code last fall, but has since poured more resources into its Codex coding assistant and prioritized sales to business customers.

The revenue comparison between the two isn’t technically apples to apples. Anthropic counts sales of its technology through cloud partners as revenue, while

OpenAI doesn’t. An Anthropic spokeswoman said that this is consistent with standard accounting practices because the company is the principal in the transaction.

Inference costs

OpenAI and Anthropic also spend billions of dollars a year to process queries made on their AI systems. These so-called “inference” costs currently eat into more than half of revenue for each company, though that percentage is expected to go down over time—a sign that the technology is becoming cheaper to run. 

Only a tiny sliver of ChatGPT’s users pay for the service, meaning that OpenAI doesn’t generate revenue for a large chunk of its inference costs. Most of Anthropic’s revenue comes from enterprises.

An OpenAI spokesperson said the company chooses to support free users because it helps with broader adoption of its technology. He added that OpenAI can also make money from those users by showing them ads or converting them into subscribers, among other things. 

News Corp, owner of The Wall Street Journal, has a content-licensing partnership with OpenAI.

Both OpenAI and Anthropic will burn through a giant amount of cash in the coming years, and are counting on their IPO investors to help buoy their businesses.

To accommodate the massive amounts of cash these companies will need to raise, bankers are trying to change the rules around IPO fundraising by asking major index providers to loosen their rules for entry. The Nasdaq recently said it would allow newly listed companies to join its index faster, giving them access to broader pools of capital.