OpenAI shifts to for-profit corporate structure amid $5 billion annual losses

OpenAI is planning to reorganize itself into a Delaware Public Benefit Corporation (PBC), a significant departure from the model it’s been running until now. This change comes as the AI giant deals with sky-high development costs—a server rack loaded with NVIDIA Blackwell chips can cost over $3 million each.

This new setup will turn OpenAI’s for-profit branch into a PBC with regular equity shares, scrapping the old rule that capped investor profits at 100 times their initial investment. The idea is to pull in money while still sticking to their mission of creating artificial general intelligence (AGI) to benefit everyone.

Money-wise, the shift couldn’t come at a better time. OpenAI is projecting a $5 billion loss for the year despite raking in $3.7 billion in revenue. Their ChatGPT service—used by more than 300 million people weekly—proves their massive reach. But keeping all those servers running isn’t cheap.

The new structure will divide things. The PBC will focus on running the business and juggling stakeholder interests. At the same time, the non-profit side will stay in charge of community-focused projects in healthcare, education, and scientific research. The non-profit still owns a big chunk of the PBC through shares, and financial experts will ensure that the value stays fair.

This is a far cry from where OpenAI started back in 2015 as a research lab. Back then, they ran on donations, pulling in $137 million in cash plus free compute credits from big tech players. Fast forward to 2019, and they’d already shifted to a hybrid model, landing more than $1 billion in funding from Microsoft alone. But today’s AI world takes way more money than that.

OpenAI’s Board of Directors is currently working with external legal and financial advisors to iron out all the restructuring details. They’re not alone in this approach—other AI players like Anthropic and xAI are also using similar setups to balance making money and building ethical AI.