Deutsche Bank says OpenAI is heading into a tougher phase of the AI cycle this year, as a flurry of negative catalysts converge.
Speaking in a CNBC interview, Deutsche Bank thematic strategist Adrian Cox says OpenAI will likely see tests in the coming months that could make or break the AI giant as the technology moves from hype to real-world deployment.
“This is actually, in a way, going to be a year of disillusionment, not only for OpenAI, but for the rest of the AI trade. And that isn’t necessarily a bad thing. It’s probably a good thing that as any technology is becoming applied in real life, then you begin to really understand what are the strengths of it and where the challenges lie.”
Cox says OpenAI’s early dominance is now colliding with structural disadvantages as rivals catch up with comparable or superior models.
“For OpenAI, I think you’re really seeing the problems that you have when you’re a company, which absolutely had the field to itself for the first couple of years, but then began to be followed up by other companies producing similar or in some cases superior models.”
He contrasts OpenAI’s position with that of hyperscalers like Google, which he says enjoy built-in advantages that extend well beyond model quality.
“And if you’re Google, for example, then you have the advantage of massive distribution, already a huge audience of users using your product absolutely every single day, not needing to go into a special app for it. You also have enormous data that you’re gathering every time you do a search. And on top of that, and possibly the most important thing, you have enormous capacity with data centers, which you’re investing in tens of billions of dollars every year.”
Cox says those advantages are shared across the hyperscaler group, leaving OpenAI with a fundamentally different cost structure.
“So, unlike them, OpenAI has to go out and raise funding for all of the training that it’s doing in data centers, which presents it with a real challenge. And so you can see why it is having to look around for different business models.”
He adds that while OpenAI has built a massive user base, monetization has not kept pace.
“It has 800 million weekly users, but its subscriptions are only a small part of that. And in fact, Deutsche Bank data that we’ve gathered in Europe shows that those subscriptions have more or less flatlined since the middle of last year. So they have to find some other way of generating revenue.”
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