In 2024, OpenAI's CEO, Sam Altman, called ads a "last resort" for businesses. Well, the parent company of ChatGPT appears to have hit this point in less than two years.
OpenAI made big news recently when it announced plans to start testing ads on U.S. users of its free and low-cost subscription accounts. The ads will be clearly labeled, and OpenAI also said it does not plan to sell user conversations to companies or let advertisements drive conversations.
Still, the move raises the question of whether this is a smart business decision or a necessity. Is OpenAI's foray into advertising a desperate cry for help?
Image source: Getty Images.
Perhaps not bad, but necessary
Make no mistake, ChatGPT has been incredibly successful. The platform is considered the fastest-growing consumer app of all time. It reportedly surpassed 900 million weekly active users as of December. OpenAI also hit an annualized revenue run rate of over $20 billion in 2025, according to a recent blog post from OpenAI's CFO, Sarah Friar.
However, larger forces are at work limiting ChatGPT. The U.S. power grid is in major need of an update and may run out of capacity in the near future without big upgrades.
Artificial intelligence (AI) consumes a ton of power and other resources, such as water. If ChatGPT continues to grow rapidly, it will need more data centers, which are costly to build. Altman publicly said that OpenAI has over $1.4 trillion in outstanding data center commitments over the next eight years, raising the question of how the company will fund all of this.
The advertising business could be a good start. Evercore ISI analyst Mark Mahaney has already said that the new ad business could surpass $25 billion in revenue by 2030. The Wall Street Journal has reported that a future OpenAI IPO could look to raise $100 billion.
Ultimately, I wouldn't necessarily characterize OpenAI's move into the ad business as a desperate cry for help from the company. However, competition is heating up, and investors should understand that not all future investments are guaranteed to deliver the desired returns. Management has also likely realized that, for the artificial intelligence industry to continue advancing, there must be a massive build-out, and OpenAI will have to play a significant role. That seems to be the message that Friar gave in a recent blog post:
"Infrastructure expands what we can deliver. Innovation expands what intelligence can do. Adoption expands who can use it. Revenue funds the next leap. This is how intelligence scales and becomes a foundation for the global economy," she wrote.
