AI bubble teeters on the brink as OpenAI admits massive financial failure following leaked documents

For anyone who thought AI companies were about to unlock billions of dollars in profits, OpenAI has some bad news for you: it’s not going to happen anytime soon.

Some hot reports from Financial Times just revealed that OpenAI’s annualized revenue – an estimate of a company’s annual income – is about $20 billion less than anyone had predicted, including, reportedly, OpenAI itself.

Since OpenAI is a private company, it’s important to note that we don’t know for sure what’s going on under the hood. That said, the FT based its reporting on internal notes to investors published at the end of September. Basically, the AI ​​lab told backers to expect revenues approaching $50 billion, far less than the explosive $70 billion figure previously announced.

Although this $70 billion figure was also based on leaked investor notes, OpenAI was in no hurry to deny it, digging itself into a $20 billion hole. Given the monumental difference between these two figures, investors in the financial world see this as a sign that demand for AI is much lower than previously thought – a signal whose ripple effects extend far beyond OpenAI.

As of Wall Street’s close Thursday, the tech-heavy Nasdaq index was down 1.25 percent for the day, while the S&P 500 fell 0.47 percent.

Companies in the middle of the AI ​​supply chain have been particularly hard hit, such as chipmaker Nvidia, which fell nearly 3% following news of the FT.

All this comes a week after consultancy Bain and Co released a grim report that said the global AI industry would need to reach an annual revenue of $6 trillion by 2031 to justify the amount of spending on AI data centers – a formidable peak, which is now $20 billion higher after the latest revelations.

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