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Tech stocks fell Thursday after a report that OpenAI’s annualized revenue is about $20 billion less than previously reported.
OpenAI, the creator of ChatGPT, recently told investors that its annualized revenue was approaching $50 billion, according to the Financial Times. This is less than the $70 billion figure previously reported by media outlets, including the FT, based on information provided by investors.
The gap could shake investors who are already wondering whether demand for AI will be strong enough to help companies like OpenAI and Anthropic turn a profit and justify the industry’s huge spending on AI development.
The Nasdaq Composite fell 1.25%, its worst day since mid-August. The S&P 500 fell 0.5%, weighed down by a drop in the technology sector. The indices had opened lower but the declines accelerated after the publication of the FT report published at midday.
A source familiar with the documents said the $70 billion figure did not come from OpenAI and likely came from the companies’ desire to compare OpenAI’s numbers with those of Anthropic, which include gross revenue from cloud providers. OpenAI is based on net income.
OpenAI declined to comment.
There were sales among semiconductor chipmakers, cloud providers and other technology companies involved in AI development. Nvidia (NVDA) fell 2.9%, Intel (INTC) fell 5.3% and Oracle (ORCL) fell 5.5%.
The outlook for many tech stocks hinges on investors’ belief that demand for AI will continue to grow. If there are problems in this story, such as OpenAI earning less revenue than expected, that could have repercussions throughout the supply chain for AI development, said Ross Mayfield, investment strategist at Baird.
“There are going to be tremors in all the sub-industries affected,” Mayfield said.
The stakes are now higher as the stock market has been supported in recent weeks by gains in technology and AI stocks, while other sectors have struggled under pressure from rising bond yields.
“It’s become a much smaller market that depends on AI names to keep it afloat,” Mayfield said. “Certainly, this is going to impact this complex in a big way.”
OpenAI CEO Sam Altman announced in September that the company would delay its IPO until at least next year, citing concerns about AI safety.
Anthropic is expected to launch its IPO later this fall, reportedly seeking a $2 trillion valuation. In August, Bloomberg and Reuters reported that the company was on track to generate annualized revenue of more than $65 billion.
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