OpenAI Won’t Be Profitable Until 2027 & “Test” Investor Expectations, Says JPMorgan
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Investment banking giant JPMorgan believes that AI leader OpenAI is unlikely to achieve profitability before 2029. JPMorgan released a note about OpenAI today, in which it shared that 75% of OpenAI’s revenue is from customer subscriptions. OpenAI had 500 million weekly active users in March, with the investment bank adding that it will be difficult for the firm to maintain a sustainable competitive advantage over rivals such as Google in the long term.
OpenAI’s Brand, Consumer Focus And Early Mover Advantage Could Unlock A $700 Billion Total Addressable Market By 2030, Says JPMorgan
One key takeaway from JPMorgan’s report is that OpenAI might find it easier to penetrate its product among consumers as opposed to enterprise users. The bank’s analyst, Brenda Duverce, notes that while enterprise uses are “a strategic focus,” they are “likely harder to crack given indirect model access, appetite for specialized, cost-efficient models, and tough competition.” Enterprise AI use has divided Wall Street, with software-as-a-service (SaaS) firms unable to integrate AI into their product portfolios being punished by investors.
The report also outlines that “model commoditization” is a likely outcome of the current AI race since developers are finding it difficult to maintain sustainable competitive advantages over each other. Model pricing also matters, says JPMorgan as it points towards the “emergence of Google’s Gemini 2.5 as a leading cost-effective model and resurgence of Chinese DeepSeek-R1.”
On the cost and pricing front, the bank adds that the need to maintain stable inferencing costs and the ‘erosion’ of pricing power have created an ecosystem where “price-to-performance” is becoming increasingly important.
The bank shares additional details about the financial metrics surrounding OpenAI. It reveals that OpenAI’s annual recurring revenue (ARR) during 2025’s first half was $10 billion after marking an 82% growth. It believes that OpenAI’s scale allows it to “balance rapid product velocity with high capex.” Additionally, while the firm is well equipped to eke out market share from rivals courtesy of its talent and product investments, OpenAI’s ability “to successfully execute remains to be seen.”
OpenAI’s current valuation is $300 billion (as of March), while the firm’s valuation ratio is 27 times its 2025 expected revenue, says JPMorgan. These high multiples, with the average multiple being 7x, coupled with the fact that the firm is expected to unprofitable until 2027, also lead JPMorgan to comment that for Open AI, “investor expectations may be tested.”
The bank also mentions President Trump’s $500 billion Stargate AI venture to note that the deal “should better position OpenAI to navigate compute and power constraints vs. private peers and enable direct hyperscaler competition.” However, at the same time, the bank also warns that it sees “rising talent and litigation risks, as well as strategic uncertainty related to OpenAI’s unconventional organizational structure (ongoing MSFT negotiations, funding contingencies, failed Windsurf deal).”
