To The Moon

As an investor, seeing projections of massive losses for any company can be unsettling. When I first saw that OpenAI doesn’t expect to turn a profit until 2029, I was floored. Losing $14 billion in a single year by 2026, and a total of $44 billion in losses over the next five years, is staggering. But there’s something about this story that feels different, something about OpenAI’s ambitions that could make this bet one of the most transformative in tech history.

With $Microsoft(MSFT)$ backing OpenAI and holding rights to 20% of its revenue, I see this as an aggressive, long-term gamble that has the potential to pay off in unprecedented ways. But make no mistake, this is a moonshot with serious risks.

Let’s talk about the numbers. OpenAI's internal projections reportedly show that they aim to hit $100 billion in annual revenue by 2029. This is a jaw-dropping figure when you consider that OpenAI’s revenue was under $2 billion last year. To put this into perspective, that kind of jump would place them in the same ballpark as $NVIDIA Corp(NVDA)$’s current annual revenue, and it would put them squarely in competition with the mega-cap companies that dominate AI, cloud computing, and enterprise tech.

But here’s the thing: achieving that kind of growth in just five years is unlike anything we’ve ever seen in tech. It’s one thing to build a wildly successful product, but scaling to $100 billion annually in such a short time means OpenAI would have to be catering to every major industry—from healthcare to finance to education—with AI solutions that are truly indispensable. That kind of widespread adoption is far from guaranteed, and the risks are enormous.

Here’s where I start to feel more cautious. OpenAI is projecting to lose money—big money—through at least 2028. These aren’t just small losses; we’re talking about $14 billion in the red in 2026 alone. That’s an insane burn rate, and it raises the question: can OpenAI even survive until 2029?

Even with the latest $6.6 billion funding round that has pushed OpenAI to a $157 billion valuation, burning cash at that pace is going to require multiple funding rounds just to keep the lights on. And who knows how the broader economic environment will look in a few years? If funding dries up, OpenAI’s ambitious plans could crumble before they ever reach profitability.

So why is Microsoft backing OpenAI so heavily? Well, for one, Microsoft isn’t just a passive investor. The deal reportedly gives Microsoft 20% of OpenAI’s revenue, which could be a massive win if OpenAI hits its ambitious targets. In fact, with OpenAI projected to generate $100 billion in revenue by 2029, Microsoft’s 20% cut would amount to $20 billion annually—money that would go straight to Microsoft’s bottom line without the operational headaches of running OpenAI.

But it’s more than just revenue-sharing. Microsoft is tightly integrating OpenAI’s technology into its Azure cloud services and its Office 365 suite. AI tools like OpenAI’s GPT models are already powering Microsoft’s products, and as AI becomes more integral to business operations, Microsoft’s strategic position as the preferred cloud provider for AI workloads could cement its dominance in the cloud market. This could help Microsoft compete against Amazon AWS and Google Cloud as enterprise clients look for robust AI solutions.

For Microsoft, this is about positioning itself as a leader in the AI revolution, and they’re willing to wait for the long-term payoff. Personally, I think Microsoft is smart to play this long game. It’s a bet on the future of AI, and while risky, it could pay off in ways that we’re only beginning to comprehend.

For OpenAI to hit $100 billion in revenue, it needs to find a scalable business model that extends beyond just selling AI research models or API access. The demand for AI is there—every major industry wants to automate tasks, analyze data, and improve efficiency—but OpenAI will need to continually innovate to stay ahead of competitors.

Companies like Google, Amazon, and Nvidia aren’t standing still, and they have the resources to match or exceed OpenAI’s innovations. OpenAI’s future growth will hinge on its ability to stay relevant in a space that’s evolving rapidly, with new AI models, tools, and applications constantly emerging.

To me, the key question is whether OpenAI can transition from being a leading AI research lab to a global AI services provider with a sustainable business model. That’s where the real challenge lies. OpenAI can’t just rest on the laurels of its breakthrough models—it needs to build ecosystems around its technologies, integrate them into enterprise systems, and prove that they deliver long-term value.

For investors in Microsoft, the company’s relationship with OpenAI adds an exciting but risky layer to its growth strategy. OpenAI’s potential to be a $100 billion revenue generator could significantly impact Microsoft’s earnings, especially with its 20% revenue share. But if OpenAI fails to reach these lofty projections or struggles under its enormous cash burn, Microsoft’s investment could end up being a high-profile failure.

Personally, I’m optimistic but cautious. I think Microsoft’s diversified portfolio—across cloud, enterprise software, gaming, and AI—provides a buffer. Even if OpenAI doesn’t meet expectations, Microsoft still stands to gain from integrating OpenAI’s models into its cloud and software products. But if OpenAI does succeed, the upside could be tremendous for Microsoft.

For OpenAI itself, the company is at a critical juncture. If they can scale and deliver on their revenue projections, they could redefine the AI landscape. But the road ahead is fraught with risk, and I wouldn’t be surprised if OpenAI needs more than a few major breakthroughs—and several more billions in funding—to reach 2029 intact.

It’s clear that OpenAI and Microsoft are making bold moves to dominate the AI market, but it’s still early days. While OpenAI’s $100 billion revenue projection seems out of reach right now, we’ve seen tech companies achieve the unthinkable before. The real question is whether OpenAI can manage its cash burn, navigate regulatory and competitive challenges, and ultimately deliver value to its customers at the scale needed to meet these ambitious goals.

As an investor, I’m keeping a close eye on how both Microsoft and OpenAI evolve over the next few years. 2029 might seem like a long way off, but in the fast-paced world of AI, that future could arrive sooner than we expect. The potential upside is enormous, but so are the risks, and only time will tell if this grand AI experiment pays off.

Would you bet on OpenAI to pull it off, or do you think these projections are just too ambitious?

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Disclaimer: This is a general analysis and not financial advice. Always conduct your own research before making any investment decisions.