Summary of Key Points
OpenAI delivered a concerning set of financial results in the second quarter of 2026: its revenue growth rate plummeted from 35.7% in the first quarter to just 18%, while losses increased from $9.3 billion to $12.3 billion. This comes at a time when the company is on the eve of its IPO, with a target valuation of over $1 trillion. The market's evaluation of OpenAI has shifted from betting on its future potential to focusing on its actual profitability. On the revenue side, it relies heavily on consumer subscriptions, and competition in the business (B2B) segment is fierce. On the cost side, research and development (R&D) is extremely costly, and its reliance on Microsoft for computing power, along with substantial long-term procurement commitments, has created a widening gap between revenue growth and cost increases. With a valuation of $1 trillion at stake, investors are questioning when OpenAI will start making a profit and whether the current losses are merely a temporary investment or indicative of a weak foundation.
Detailed Analysis
1. Revenue Growth Seems Insufficient: Consumer Side Relying on Existing Packages, Business Side Still Working on Strengthening Its Foundation
Sixty percent of OpenAI's revenue comes from consumer subscriptions to ChatGPT, with the $20/month Plus package being the main contributor. Although additional options such as the $8 Go package and the $100-$200 Pro packages have been introduced, the number of premium users is too small to significantly boost average revenue per user (ARPU). This means that growth in the consumer segment can only be achieved by increasing Plus subscriptions, but with fixed prices, there is a ceiling to user growth.
The business side (B2B) has seen rapid growth (a 32% increase quarter-over-quarter in July), but it faces several challenges: first, its sales structure is still being reorganized (with a new chief revenue officer and acquisitions to bolster the engineering team), and it has yet to transition from selling products to providing customized services for businesses; second, competition is intense—Anthropic is targeting financial and legal clients by not collecting their data, while Microsoft and Google are offering AI and cloud services bundled together, and open-source models are also competing; third, recent price cuts (20%-80% on certain GPT-5.6 packages) may attract more users, but whether this will compensate for the reduced revenue remains uncertain.
2. Cost Challenges: Revenue Doesn't Even Cover Basic R&D Expenses
OpenAI's biggest problem is that its revenue growth is slow, while costs are rising rapidly:
- High推理 (inference) costs: Serving users consumes significant computing power. In 2025, inference costs amounted to $7.5 billion, accounting for more than half of total revenue, resulting in a gross margin of only 42%; in the first quarter of 2026, the gross margin dropped to 39%.
- Intense R&D spending: R&D expenses in 2025 were $19.2 billion, exceeding annual revenue. In the first quarter of 2026, R&D costs reached $8.6 billion, four times the quarterly gross profit of $2.2 billion—meaning all earnings are being reinvested without covering these expenses.
- Dependence on Microsoft for Computing Power: OpenAI uses Microsoft Azure for all its computing needs, and in the first quarter of 2026, 72% of costs went to cloud providers (mainly Microsoft). It has also signed a $665 billion contract for computing power through 2030, giving Microsoft significant bargaining power and putting pressure on OpenAI's finances.
3. Changing Valuation Logic: From Storytelling to Financial Performance
Previously, early-stage investors were willing to give OpenAI a high valuation based on the potential for it to become the next major AI infrastructure provider (similar to cloud services). However, with an IPO, valuations must be supported by actual financial data. A $1 trillion valuation would require annual revenue of around $100 billion at a price-to-sales ratio of 10-15 times. In the second quarter, revenue was only $6.7 billion, meaning annual revenue would need to reach about $27 billion to meet this target. The market is now more concerned with whether OpenAI can generate profits, whether its revenue growth can be sustained, and whether its expenses are building a solid foundation for long-term success.
4. The IPO as a Critical Turning Point: From Hype to Performance
Before the IPO, OpenAI could rely on its AI revolution narrative to attract a high valuation. After the IPO, it must prove its worth with quarterly financial reports. The second-quarter results have exposed weaknesses: its cost structure is not efficient, and profitability is not likely until 2029-2030, despite ongoing heavy investment in R&D and computing power.
5. Impact on the Market: End of the "Blind Buy" Era for AI Stocks
OpenAI's performance affects the entire AI sector. As a leader in the industry, its $665 billion computing power contract represents the current trend of spending heavily to drive growth. If OpenAI cannot demonstrate that these expenses are building a competitive advantage (e.g., through technological leadership or user loyalty), its valuation could be significantly reduced.
6. Consequences for the AI Industry
OpenAI's performance has implications for the broader AI market. If it fails to show that its losses are investing in future growth (such as technology development or customer retention), investors will reevaluate the sustainability of the entire AI sector. The belief that "technology alone leads to profitability" is being questioned, and investors will now focus on companies that can control costs, establish stable profit models, and have a solid competitive advantage.
In Conclusion
OpenAI's dream of achieving a $1 trillion valuation through an IPO hinges on its ability to transform from a money-consuming entity into a profitable one. Time is running out, and the company's performance in the coming quarters will determine whether it becomes the new Microsoft in the AI industry or just a fleeting bubble.
Disclaimer: This article does not constitute investment advice; investors should proceed with caution.